Correlation Between General Cannabis and TOMI Environmental
Can any of the company-specific risk be diversified away by investing in both General Cannabis and TOMI Environmental 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 General Cannabis and TOMI Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Cannabis Corp and TOMI Environmental Solutions, you can compare the effects of market volatilities on General Cannabis and TOMI Environmental 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 General Cannabis with a short position of TOMI Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Cannabis and TOMI Environmental.
Diversification Opportunities for General Cannabis and TOMI Environmental
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and TOMI is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Cannabis Corp and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental and General 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 General Cannabis Corp are associated (or correlated) with TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of General Cannabis i.e., General Cannabis and TOMI Environmental go up and down completely randomly.
Pair Corralation between General Cannabis and TOMI Environmental
Given the investment horizon of 90 days General Cannabis Corp is expected to under-perform the TOMI Environmental. In addition to that, General Cannabis is 1.47 times more volatile than TOMI Environmental Solutions. It trades about -0.07 of its total potential returns per unit of risk. TOMI Environmental Solutions is currently generating about 0.03 per unit of volatility. If you would invest 68.00 in TOMI Environmental Solutions on September 5, 2024 and sell it today you would earn a total of 3.00 from holding TOMI Environmental Solutions or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.82% |
| Values | Daily Returns |
General Cannabis Corp vs. TOMI Environmental Solutions
Performance |
| Timeline |
| General Cannabis Corp |
| TOMI Environmental |
General Cannabis and TOMI Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Cannabis and TOMI Environmental
The main advantage of trading using opposite General Cannabis and TOMI Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Cannabis position performs unexpectedly, TOMI Environmental 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 TOMI Environmental will offset losses from the drop in TOMI Environmental's long position.| General Cannabis vs. TOMI Environmental Solutions | General Cannabis vs. SCOR PK | General Cannabis vs. HUMANA INC | General Cannabis vs. Aquagold International |
| TOMI Environmental vs. CRA International | TOMI Environmental vs. ICF International | TOMI Environmental vs. Forrester Research | TOMI Environmental vs. Huron Consulting Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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