Correlation Between Fresh Grapes and Global Clean

Can any of the company-specific risk be diversified away by investing in both Fresh Grapes and Global Clean at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fresh Grapes and Global Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fresh Grapes LLC and Global Clean Energy, you can compare the effects of market volatilities on Fresh Grapes and Global Clean and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fresh Grapes with a short position of Global Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Grapes and Global Clean.

Diversification Opportunities for Fresh Grapes and Global Clean

-0.32

Correlation Coefficient

Fresh Grapes  Global Clean

Very good diversification

The 3 months correlation between Fresh and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and Global Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Clean Energy and Fresh Grapes is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fresh Grapes LLC are associated (or correlated) with Global Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Clean Energy has no effect on the direction of Fresh Grapes i.e., Fresh Grapes and Global Clean go up and down completely randomly.

Pair Corralation between Fresh Grapes and Global Clean

Given the investment horizon of 90 days Fresh Grapes LLC is expected to under-perform the Global Clean. But the stock apears to be less risky and, when comparing its historical volatility, Fresh Grapes LLC is 3.32 times less risky than Global Clean. The stock trades about -0.14 of its potential returns per unit of risk. The Global Clean Energy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Global Clean Energy on September 25, 2024 and sell it today you would earn a total of  66.00  from holding Global Clean Energy or generate 73.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Fresh Grapes LLC  vs.  Global Clean Energy

Fresh Grapes LLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Grapes LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fresh Grapes may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Clean Energy

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Clean Energy are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Global Clean demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresh Grapes and Global Clean

The main advantage of trading using opposite Fresh Grapes and Global Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresh Grapes position performs unexpectedly, Global Clean can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global Clean will offset losses from the drop in Global Clean's long position.

The idea behind Fresh Grapes LLC and Global Clean Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.