Correlation Between American Cannabis and General Cannabis
Can any of the company-specific risk be diversified away by investing in both American Cannabis and General 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 American Cannabis and General Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Cannabis and General Cannabis Corp, you can compare the effects of market volatilities on American Cannabis and General 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 American Cannabis with a short position of General Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Cannabis and General Cannabis.
Diversification Opportunities for American Cannabis and General Cannabis
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and General is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding American Cannabis and General Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Cannabis Corp 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 General Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Cannabis Corp has no effect on the direction of American Cannabis i.e., American Cannabis and General Cannabis go up and down completely randomly.
Pair Corralation between American Cannabis and General Cannabis
Given the investment horizon of 90 days American Cannabis is expected to generate 10.02 times more return on investment than General Cannabis. However, American Cannabis is 10.02 times more volatile than General Cannabis Corp. It trades about 0.24 of its potential returns per unit of risk. General Cannabis Corp is currently generating about -0.14 per unit of risk. If you would invest 0.02 in American Cannabis on August 30, 2024 and sell it today you would earn a total of 0.01 from holding American Cannabis or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Cannabis vs. General Cannabis Corp
Performance |
| Timeline |
| American Cannabis |
| General Cannabis Corp |
American Cannabis and General Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Cannabis and General Cannabis
The main advantage of trading using opposite American Cannabis and General Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Cannabis position performs unexpectedly, General 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 General Cannabis will offset losses from the drop in General Cannabis' 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 |
| General Cannabis vs. Verano Holdings Corp | General Cannabis vs. 4Front Ventures Corp | General Cannabis vs. Ascend Wellness Holdings | General Cannabis vs. Medicine Man Technologies |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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