Correlation Between Cannabis Sativa and American Cannabis
Can any of the company-specific risk be diversified away by investing in both Cannabis Sativa 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 Cannabis Sativa and American Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannabis Sativa and American Cannabis, you can compare the effects of market volatilities on Cannabis Sativa 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 Cannabis Sativa with a short position of American Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannabis Sativa and American Cannabis.
Diversification Opportunities for Cannabis Sativa and American Cannabis
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cannabis and American is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cannabis Sativa and American Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Cannabis and Cannabis Sativa 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 Cannabis Sativa 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 Cannabis Sativa i.e., Cannabis Sativa and American Cannabis go up and down completely randomly.
Pair Corralation between Cannabis Sativa and American Cannabis
Given the investment horizon of 90 days Cannabis Sativa is expected to generate 25.64 times less return on investment than American Cannabis. But when comparing it to its historical volatility, Cannabis Sativa is 7.0 times less risky than American Cannabis. It trades about 0.06 of its potential returns per unit of risk. American Cannabis is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.02 in American Cannabis on August 26, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cannabis Sativa vs. American Cannabis
Performance |
| Timeline |
| Cannabis Sativa |
| American Cannabis |
Cannabis Sativa and American Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cannabis Sativa and American Cannabis
The main advantage of trading using opposite Cannabis Sativa and American Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannabis Sativa 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.| Cannabis Sativa vs. Embotelladora Andina SA | Cannabis Sativa vs. Signet International Holdings | Cannabis Sativa vs. National Beverage Corp | Cannabis Sativa vs. PT Astra International |
| American Cannabis vs. Sack Lunch Productions | American Cannabis vs. Potash America | American Cannabis vs. Blue Diamond Ventures | American Cannabis vs. Dalrada Financial Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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