Correlation Between Target and Green Cures
Can any of the company-specific risk be diversified away by investing in both Target and Green Cures 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 Green Cures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Group and Green Cures Botanical, you can compare the effects of market volatilities on Target and Green Cures 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 Green Cures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Green Cures.
Diversification Opportunities for Target and Green Cures
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Target and Green is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Target Group and Green Cures Botanical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cures Botanical 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 Green Cures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cures Botanical has no effect on the direction of Target i.e., Target and Green Cures go up and down completely randomly.
Pair Corralation between Target and Green Cures
Given the investment horizon of 90 days Target is expected to generate 4.02 times less return on investment than Green Cures. But when comparing it to its historical volatility, Target Group is 2.07 times less risky than Green Cures. It trades about 0.14 of its potential returns per unit of risk. Green Cures Botanical is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Green Cures Botanical on November 7, 2024 and sell it today you would earn a total of 0.01 from holding Green Cures Botanical or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Target Group vs. Green Cures Botanical
Performance |
| Timeline |
| Target Group |
| Green Cures Botanical |
Target and Green Cures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Green Cures
The main advantage of trading using opposite Target and Green Cures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, Green Cures 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 Green Cures will offset losses from the drop in Green Cures' long position.| Target vs. Aequus Pharmaceuticals | Target vs. Filament Health Corp | Target vs. Sky Century Investment | Target vs. Levitee Labs |
| Green Cures vs. Cann American Corp | Green Cures vs. Rimrock Gold Corp | Green Cures vs. Galexxy Holdings | Green Cures vs. Indoor Harvest 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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