Correlation Between Cann American and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both Cann American and Cresco Labs 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 Cann American and Cresco Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cann American Corp and Cresco Labs, you can compare the effects of market volatilities on Cann American and Cresco Labs 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 Cann American with a short position of Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cann American and Cresco Labs.
Diversification Opportunities for Cann American and Cresco Labs
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cann and Cresco is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs and Cann American 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 Cann American Corp are associated (or correlated) with Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Cann American i.e., Cann American and Cresco Labs go up and down completely randomly.
Pair Corralation between Cann American and Cresco Labs
Given the investment horizon of 90 days Cann American Corp is expected to generate 5.04 times more return on investment than Cresco Labs. However, Cann American is 5.04 times more volatile than Cresco Labs. It trades about 0.22 of its potential returns per unit of risk. Cresco Labs is currently generating about 0.04 per unit of risk. If you would invest 0.20 in Cann American Corp on November 27, 2024 and sell it today you would earn a total of 0.25 from holding Cann American Corp or generate 125.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cann American Corp vs. Cresco Labs
Performance |
| Timeline |
| Cann American Corp |
| Cresco Labs |
Cann American and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cann American and Cresco Labs
The main advantage of trading using opposite Cann American and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cann American position performs unexpectedly, Cresco Labs 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 Cresco Labs will offset losses from the drop in Cresco Labs' long position.| Cann American vs. XCPCNL Business Services | Cann American vs. Golden Developing Solutions | Cann American vs. Indo Global Exchange | Cann American vs. Cgrowth Capital |
| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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