Correlation Between Acreage Holdings and Cann American
Can any of the company-specific risk be diversified away by investing in both Acreage Holdings and Cann American 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 Cann American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acreage Holdings and Cann American Corp, you can compare the effects of market volatilities on Acreage Holdings and Cann American 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 Cann American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acreage Holdings and Cann American.
Diversification Opportunities for Acreage Holdings and Cann American
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Acreage and Cann is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Acreage Holdings and Cann American Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cann American Corp 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 Cann American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cann American Corp has no effect on the direction of Acreage Holdings i.e., Acreage Holdings and Cann American go up and down completely randomly.
Pair Corralation between Acreage Holdings and Cann American
Assuming the 90 days horizon Acreage Holdings is expected to under-perform the Cann American. But the otc stock apears to be less risky and, when comparing its historical volatility, Acreage Holdings is 1.93 times less risky than Cann American. The otc stock trades about -0.02 of its potential returns per unit of risk. The Cann American Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.90 in Cann American Corp on September 4, 2024 and sell it today you would lose (0.60) from holding Cann American Corp or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Acreage Holdings vs. Cann American Corp
Performance |
| Timeline |
| Acreage Holdings |
| Cann American Corp |
Acreage Holdings and Cann American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acreage Holdings and Cann American
The main advantage of trading using opposite Acreage Holdings and Cann American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acreage Holdings position performs unexpectedly, Cann American 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 Cann American will offset losses from the drop in Cann American's long position.| Acreage Holdings vs. Verano Holdings Corp | Acreage Holdings vs. Ascend Wellness Holdings | Acreage Holdings vs. Green Thumb Industries | Acreage Holdings vs. Slang Worldwide |
| Cann American vs. XCPCNL Business Services | Cann American vs. Golden Developing Solutions | Cann American vs. Indo Global Exchange | Cann American vs. Cgrowth Capital |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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