Correlation Between GreenPower and Proto Labs

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

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

Diversification Opportunities for GreenPower and Proto Labs

0.64

Correlation Coefficient

GreenPower  Proto Labs

Poor diversification

The 3 months correlation between GreenPower and Proto is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Proto Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proto Labs and GreenPower 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 GreenPower Motor are associated (or correlated) with Proto Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proto Labs has no effect on the direction of GreenPower i.e., GreenPower and Proto Labs go up and down completely randomly.

Pair Corralation between GreenPower and Proto Labs

Allowing for the 90-day total investment horizon GreenPower is expected to generate 7.29 times less return on investment than Proto Labs. In addition to that, GreenPower is 1.15 times more volatile than Proto Labs. It trades about 0.05 of its total potential returns per unit of risk. Proto Labs is currently generating about 0.45 per unit of volatility. If you would invest  3,336  in Proto Labs on February 16, 2025 and sell it today you would earn a total of  772.00  from holding Proto Labs or generate 23.14% return on investment over 90 days.

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

GreenPower Motor  vs.  Proto Labs

GreenPower Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days GreenPower Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Proto Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Proto Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Proto Labs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GreenPower and Proto Labs

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

The idea behind GreenPower Motor and Proto Labs 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.