Correlation Between Tilray and Graco

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

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

Diversification Opportunities for Tilray and Graco

-0.68

Correlation Coefficient

Tilray  Graco

Excellent diversification

The 3 months correlation between Tilray and Graco is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc and Tilray 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 Tilray Inc are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Tilray i.e., Tilray and Graco go up and down completely randomly.

Pair Corralation between Tilray and Graco

Given the investment horizon of 90 days Tilray Inc is expected to under-perform the Graco. In addition to that, Tilray is 2.46 times more volatile than Graco Inc. It trades about -0.08 of its total potential returns per unit of risk. Graco Inc is currently generating about 0.05 per unit of volatility. If you would invest  8,305  in Graco Inc on August 18, 2024 and sell it today you would earn a total of  657.00  from holding Graco Inc or generate 7.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Tilray Inc  vs.  Graco Inc

Tilray Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tilray Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Graco Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Graco may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Tilray and Graco

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

The idea behind Tilray Inc and Graco Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..