Correlation Between Target and Cann American
Can any of the company-specific risk be diversified away by investing in both Target and Cann American 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 Target and Cann American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Group and Cann American Corp, you can compare the effects of market volatilities on Target and Cann American 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 Target with a short position of Cann American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Cann American.
Diversification Opportunities for Target and Cann American
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Target and Cann is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Target Group and Cann American Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cann American Corp and Target 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 Target Group are associated (or correlated) with Cann American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cann American Corp has no effect on the direction of Target i.e., Target and Cann American go up and down completely randomly.
Pair Corralation between Target and Cann American
Given the investment horizon of 90 days Target Group is expected to generate 1.17 times more return on investment than Cann American. However, Target is 1.17 times more volatile than Cann American Corp. It trades about 0.09 of its potential returns per unit of risk. Cann American Corp is currently generating about 0.07 per unit of risk. If you would invest 0.75 in Target Group on August 26, 2024 and sell it today you would lose (0.51) from holding Target Group or give up 68.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Group vs. Cann American Corp
Performance |
| Timeline |
| Target Group |
| Cann American Corp |
Target and Cann American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Cann American
The main advantage of trading using opposite Target and Cann American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, Cann American 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 Cann American will offset losses from the drop in Cann American's long position.| Target vs. Green Cures Botanical | Target vs. Galexxy Holdings | Target vs. Indoor Harvest Corp | Target vs. Speakeasy Cannabis Club |
| Cann American vs. Green Cures Botanical | Cann American vs. Galexxy Holdings | Cann American vs. Indoor Harvest Corp | Cann American 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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