Correlation Between Easton Pharmaceutica and American Green

Can any of the company-specific risk be diversified away by investing in both Easton Pharmaceutica and American Green 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 Easton Pharmaceutica and American Green into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Easton Pharmaceutica and American Green, you can compare the effects of market volatilities on Easton Pharmaceutica and American Green 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 Easton Pharmaceutica with a short position of American Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easton Pharmaceutica and American Green.

Diversification Opportunities for Easton Pharmaceutica and American Green

0.46

Correlation Coefficient

Easton Pharmaceutica  American Green

Very weak diversification

The 3 months correlation between Easton and American is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Easton Pharmaceutica and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green and Easton Pharmaceutica 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 Easton Pharmaceutica are associated (or correlated) with American Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Green has no effect on the direction of Easton Pharmaceutica i.e., Easton Pharmaceutica and American Green go up and down completely randomly.

Pair Corralation between Easton Pharmaceutica and American Green

Given the investment horizon of 90 days Easton Pharmaceutica is expected to under-perform the American Green. But the stock apears to be less risky and, when comparing its historical volatility, Easton Pharmaceutica is 1.65 times less risky than American Green. The stock trades about -0.13 of its potential returns per unit of risk. The American Green is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.04  in American Green on May 7, 2025 and sell it today you would lose (0.01) from holding American Green or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Easton Pharmaceutica  vs.  American Green

Easton Pharmaceutica

Risk-Adjusted Performance

Weakest

Over the last 90 days Easton Pharmaceutica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

American Green

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in American Green are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, American Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Easton Pharmaceutica and American Green

The main advantage of trading using opposite Easton Pharmaceutica and American Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easton Pharmaceutica position performs unexpectedly, American Green 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 American Green will offset losses from the drop in American Green's long position.

The idea behind Easton Pharmaceutica and American Green 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.