Correlation Between Aerius International and American Cannabis
Can any of the company-specific risk be diversified away by investing in both Aerius International and American Cannabis 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 Aerius International and American Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerius International and American Cannabis, you can compare the effects of market volatilities on Aerius International and American Cannabis 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 Aerius International with a short position of American Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerius International and American Cannabis.
Diversification Opportunities for Aerius International and American Cannabis
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aerius and American is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aerius International and American Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Cannabis and Aerius International 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 Aerius International are associated (or correlated) with American Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Cannabis has no effect on the direction of Aerius International i.e., Aerius International and American Cannabis go up and down completely randomly.
Pair Corralation between Aerius International and American Cannabis
Given the investment horizon of 90 days Aerius International is expected to generate 1.0 times more return on investment than American Cannabis. However, Aerius International is 1.0 times more volatile than American Cannabis. It trades about 0.09 of its potential returns per unit of risk. American Cannabis is currently generating about 0.05 per unit of risk. If you would invest 0.49 in Aerius International on August 25, 2024 and sell it today you would lose (0.32) from holding Aerius International or give up 65.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerius International vs. American Cannabis
Performance |
| Timeline |
| Aerius International |
| American Cannabis |
Aerius International and American Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerius International and American Cannabis
The main advantage of trading using opposite Aerius International and American Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerius International position performs unexpectedly, American Cannabis 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 American Cannabis will offset losses from the drop in American Cannabis' long position.| Aerius International vs. Sack Lunch Productions | Aerius International vs. Potash America | Aerius International vs. Blue Diamond Ventures | Aerius International vs. Daniels Corporate Advisory |
| American Cannabis vs. AimRite Holdings Corp | American Cannabis vs. Sack Lunch Productions | American Cannabis vs. American Diversified Holdings | American Cannabis vs. Booz Allen Hamilton |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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