Correlation Between Hempfusion Wellness and HempAmericana
Can any of the company-specific risk be diversified away by investing in both Hempfusion Wellness and HempAmericana 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 Hempfusion Wellness and HempAmericana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hempfusion Wellness and HempAmericana, you can compare the effects of market volatilities on Hempfusion Wellness and HempAmericana 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 Hempfusion Wellness with a short position of HempAmericana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hempfusion Wellness and HempAmericana.
Diversification Opportunities for Hempfusion Wellness and HempAmericana
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Hempfusion and HempAmericana is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Hempfusion Wellness and HempAmericana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HempAmericana and Hempfusion Wellness 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 Hempfusion Wellness are associated (or correlated) with HempAmericana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HempAmericana has no effect on the direction of Hempfusion Wellness i.e., Hempfusion Wellness and HempAmericana go up and down completely randomly.
Pair Corralation between Hempfusion Wellness and HempAmericana
Assuming the 90 days horizon Hempfusion Wellness is expected to generate 2.01 times more return on investment than HempAmericana. However, Hempfusion Wellness is 2.01 times more volatile than HempAmericana. It trades about 0.1 of its potential returns per unit of risk. HempAmericana is currently generating about 0.05 per unit of risk. If you would invest 0.01 in Hempfusion Wellness on August 26, 2024 and sell it today you would earn a total of 0.00 from holding Hempfusion Wellness or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hempfusion Wellness vs. HempAmericana
Performance |
| Timeline |
| Hempfusion Wellness |
| HempAmericana |
Hempfusion Wellness and HempAmericana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hempfusion Wellness and HempAmericana
The main advantage of trading using opposite Hempfusion Wellness and HempAmericana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hempfusion Wellness position performs unexpectedly, HempAmericana 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 HempAmericana will offset losses from the drop in HempAmericana's long position.| Hempfusion Wellness vs. Green Cures Botanical | Hempfusion Wellness vs. Galexxy Holdings | Hempfusion Wellness vs. Indoor Harvest Corp | Hempfusion Wellness vs. Speakeasy Cannabis Club |
| HempAmericana vs. Green Cures Botanical | HempAmericana vs. Galexxy Holdings | HempAmericana vs. Indoor Harvest Corp | HempAmericana vs. Speakeasy Cannabis Club |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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