Correlation Between Booz Allen and American Cannabis
Can any of the company-specific risk be diversified away by investing in both Booz Allen 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 Booz Allen and American Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booz Allen Hamilton and American Cannabis, you can compare the effects of market volatilities on Booz Allen 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 Booz Allen with a short position of American Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and American Cannabis.
Diversification Opportunities for Booz Allen and American Cannabis
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Booz and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and American Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Cannabis and Booz Allen 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 Booz Allen Hamilton 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 Booz Allen i.e., Booz Allen and American Cannabis go up and down completely randomly.
Pair Corralation between Booz Allen and American Cannabis
Considering the 90-day investment horizon Booz Allen Hamilton is expected to under-perform the American Cannabis. But the stock apears to be less risky and, when comparing its historical volatility, Booz Allen Hamilton is 24.93 times less risky than American Cannabis. The stock trades about -0.01 of its potential returns per unit of risk. The American Cannabis is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.50 in American Cannabis on August 25, 2024 and sell it today you would lose (0.48) from holding American Cannabis or give up 96.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Booz Allen Hamilton vs. American Cannabis
Performance |
| Timeline |
| Booz Allen Hamilton |
| American Cannabis |
Booz Allen and American Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booz Allen and American Cannabis
The main advantage of trading using opposite Booz Allen and American Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booz Allen 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.| Booz Allen vs. Huron Consulting Group | Booz Allen vs. CRA International | Booz Allen vs. Forrester Research | Booz Allen vs. Exponent |
| 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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