Correlation Between Acreage Holdings and BZAM
Can any of the company-specific risk be diversified away by investing in both Acreage Holdings and BZAM 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 Acreage Holdings and BZAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acreage Holdings and BZAM, you can compare the effects of market volatilities on Acreage Holdings and BZAM 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 Acreage Holdings with a short position of BZAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acreage Holdings and BZAM.
Diversification Opportunities for Acreage Holdings and BZAM
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Acreage and BZAM is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Acreage Holdings and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM and Acreage Holdings 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 Acreage Holdings are associated (or correlated) with BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Acreage Holdings i.e., Acreage Holdings and BZAM go up and down completely randomly.
Pair Corralation between Acreage Holdings and BZAM
Assuming the 90 days horizon Acreage Holdings is expected to generate 22.83 times less return on investment than BZAM. But when comparing it to its historical volatility, Acreage Holdings is 5.48 times less risky than BZAM. It trades about 0.01 of its potential returns per unit of risk. BZAM is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 41.00 in BZAM on August 29, 2024 and sell it today you would lose (41.00) from holding BZAM or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Acreage Holdings vs. BZAM
Performance |
| Timeline |
| Acreage Holdings |
| BZAM |
Acreage Holdings and BZAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acreage Holdings and BZAM
The main advantage of trading using opposite Acreage Holdings and BZAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acreage Holdings position performs unexpectedly, BZAM 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 BZAM will offset losses from the drop in BZAM's long position.| Acreage Holdings vs. AYR Strategies Class | Acreage Holdings vs. RIV Capital | Acreage Holdings vs. Verano Holdings Corp | Acreage Holdings vs. BZAM |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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