Correlation Between 1606 Corp and 22nd Century
Can any of the company-specific risk be diversified away by investing in both 1606 Corp and 22nd Century 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 1606 Corp and 22nd Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1606 Corp and 22nd Century Group, you can compare the effects of market volatilities on 1606 Corp and 22nd Century 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 1606 Corp with a short position of 22nd Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1606 Corp and 22nd Century.
Diversification Opportunities for 1606 Corp and 22nd Century
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 1606 and 22nd is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding 1606 Corp and 22nd Century Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 22nd Century Group and 1606 Corp 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 1606 Corp are associated (or correlated) with 22nd Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 22nd Century Group has no effect on the direction of 1606 Corp i.e., 1606 Corp and 22nd Century go up and down completely randomly.
Pair Corralation between 1606 Corp and 22nd Century
Given the investment horizon of 90 days 1606 Corp is expected to generate 2.55 times more return on investment than 22nd Century. However, 1606 Corp is 2.55 times more volatile than 22nd Century Group. It trades about 0.05 of its potential returns per unit of risk. 22nd Century Group is currently generating about -0.1 per unit of risk. If you would invest 1.40 in 1606 Corp on August 28, 2024 and sell it today you would lose (0.20) from holding 1606 Corp or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
1606 Corp vs. 22nd Century Group
Performance |
| Timeline |
| 1606 Corp |
| 22nd Century Group |
1606 Corp and 22nd Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1606 Corp and 22nd Century
The main advantage of trading using opposite 1606 Corp and 22nd Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1606 Corp position performs unexpectedly, 22nd Century 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 22nd Century will offset losses from the drop in 22nd Century's long position.| 1606 Corp vs. Doubledown Interactive Co | 1606 Corp vs. Wicket Gaming AB | 1606 Corp vs. NetEase | 1606 Corp vs. Chemours Co |
| 22nd Century vs. Turning Point Brands | 22nd Century vs. Green Globe International | 22nd Century vs. Imperial Brands PLC | 22nd Century vs. Kaival Brands Innovations |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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