Correlation Between American Cannabis and Equifax
Can any of the company-specific risk be diversified away by investing in both American Cannabis and Equifax 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 Equifax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Cannabis and Equifax, you can compare the effects of market volatilities on American Cannabis and Equifax 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 Equifax. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Cannabis and Equifax.
Diversification Opportunities for American Cannabis and Equifax
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Equifax is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Cannabis and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax 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 Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of American Cannabis i.e., American Cannabis and Equifax go up and down completely randomly.
Pair Corralation between American Cannabis and Equifax
Given the investment horizon of 90 days American Cannabis is expected to generate 18.91 times more return on investment than Equifax. However, American Cannabis is 18.91 times more volatile than Equifax. It trades about 0.08 of its potential returns per unit of risk. Equifax is currently generating about 0.03 per unit of risk. If you would invest 1.30 in American Cannabis on September 4, 2024 and sell it today you would lose (1.27) from holding American Cannabis or give up 97.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Cannabis vs. Equifax
Performance |
| Timeline |
| American Cannabis |
| Equifax |
American Cannabis and Equifax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Cannabis and Equifax
The main advantage of trading using opposite American Cannabis and Equifax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Cannabis position performs unexpectedly, Equifax 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 Equifax will offset losses from the drop in Equifax'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 |
| Equifax vs. Verisk Analytics | Equifax vs. Exponent | Equifax vs. FTI Consulting | Equifax vs. Franklin Covey |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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