Correlation Between Apple and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both Apple and Cresco 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 Apple and Cresco Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Cresco Labs, you can compare the effects of market volatilities on Apple and Cresco 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 Apple with a short position of Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Cresco Labs.
Diversification Opportunities for Apple and Cresco Labs
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and Cresco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs and Apple 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 Apple Inc are associated (or correlated) with Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Apple i.e., Apple and Cresco Labs go up and down completely randomly.
Pair Corralation between Apple and Cresco Labs
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Cresco Labs. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 2.37 times less risky than Cresco Labs. The stock trades about -0.08 of its potential returns per unit of risk. The Cresco Labs is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Cresco Labs on November 3, 2024 and sell it today you would lose (3.00) from holding Cresco Labs or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Cresco Labs
Performance |
| Timeline |
| Apple Inc |
| Cresco Labs |
Apple and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Cresco Labs
The main advantage of trading using opposite Apple and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Cresco 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 Cresco Labs will offset losses from the drop in Cresco Labs' long position.The idea behind Apple Inc and Cresco 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.| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
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.
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