Correlation Between American Balanced and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both American Balanced 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 American Balanced and Cresco Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Cresco Labs, you can compare the effects of market volatilities on American Balanced 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 American Balanced with a short position of Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Cresco Labs.
Diversification Opportunities for American Balanced and Cresco Labs
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Cresco is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs and American Balanced 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 American Balanced 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 American Balanced i.e., American Balanced and Cresco Labs go up and down completely randomly.
Pair Corralation between American Balanced and Cresco Labs
Assuming the 90 days horizon American Balanced is expected to generate 0.14 times more return on investment than Cresco Labs. However, American Balanced is 6.95 times less risky than Cresco Labs. It trades about 0.22 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.02 per unit of risk. If you would invest 3,439 in American Balanced on November 3, 2024 and sell it today you would earn a total of 94.00 from holding American Balanced or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced vs. Cresco Labs
Performance |
| Timeline |
| American Balanced |
| Cresco Labs |
American Balanced and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Cresco Labs
The main advantage of trading using opposite American Balanced and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced 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.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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