Correlation Between American Cannabis and Blue Diamond
Can any of the company-specific risk be diversified away by investing in both American Cannabis and Blue Diamond 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 Cannabis and Blue Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Cannabis and Blue Diamond Ventures, you can compare the effects of market volatilities on American Cannabis and Blue Diamond 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 Cannabis with a short position of Blue Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Cannabis and Blue Diamond.
Diversification Opportunities for American Cannabis and Blue Diamond
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Blue is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding American Cannabis and Blue Diamond Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Diamond Ventures and American Cannabis 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 Cannabis are associated (or correlated) with Blue Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Diamond Ventures has no effect on the direction of American Cannabis i.e., American Cannabis and Blue Diamond go up and down completely randomly.
Pair Corralation between American Cannabis and Blue Diamond
Given the investment horizon of 90 days American Cannabis is expected to generate 2.12 times more return on investment than Blue Diamond. However, American Cannabis is 2.12 times more volatile than Blue Diamond Ventures. It trades about 0.25 of its potential returns per unit of risk. Blue Diamond Ventures is currently generating about 0.25 per unit of risk. If you would invest 0.02 in American Cannabis on August 29, 2024 and sell it today you would earn a total of 0.02 from holding American Cannabis or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Cannabis vs. Blue Diamond Ventures
Performance |
| Timeline |
| American Cannabis |
| Blue Diamond Ventures |
American Cannabis and Blue Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Cannabis and Blue Diamond
The main advantage of trading using opposite American Cannabis and Blue Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Cannabis position performs unexpectedly, Blue Diamond 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 Blue Diamond will offset losses from the drop in Blue Diamond's long position.| American Cannabis vs. AimRite Holdings Corp | American Cannabis vs. Sack Lunch Productions | American Cannabis vs. American Diversified Holdings | American Cannabis vs. Booz Allen Hamilton |
| Blue Diamond vs. Sack Lunch Productions | Blue Diamond vs. Potash America | Blue Diamond vs. Dalrada Financial Corp | Blue Diamond vs. TransUnion |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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