Correlation Between Cresco Labs and Decibel Cannabis
Can any of the company-specific risk be diversified away by investing in both Cresco Labs and Decibel 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 Cresco Labs and Decibel Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cresco Labs and Decibel Cannabis, you can compare the effects of market volatilities on Cresco Labs and Decibel 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 Cresco Labs with a short position of Decibel Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cresco Labs and Decibel Cannabis.
Diversification Opportunities for Cresco Labs and Decibel Cannabis
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cresco and Decibel is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cresco Labs and Decibel Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decibel Cannabis and Cresco Labs 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 Cresco Labs are associated (or correlated) with Decibel Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decibel Cannabis has no effect on the direction of Cresco Labs i.e., Cresco Labs and Decibel Cannabis go up and down completely randomly.
Pair Corralation between Cresco Labs and Decibel Cannabis
Assuming the 90 days horizon Cresco Labs is expected to under-perform the Decibel Cannabis. In addition to that, Cresco Labs is 1.07 times more volatile than Decibel Cannabis. It trades about -0.03 of its total potential returns per unit of risk. Decibel Cannabis is currently generating about 0.12 per unit of volatility. If you would invest 4.00 in Decibel Cannabis on September 1, 2024 and sell it today you would earn a total of 0.68 from holding Decibel Cannabis or generate 17.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cresco Labs vs. Decibel Cannabis
Performance |
| Timeline |
| Cresco Labs |
| Decibel Cannabis |
Cresco Labs and Decibel Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cresco Labs and Decibel Cannabis
The main advantage of trading using opposite Cresco Labs and Decibel Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cresco Labs position performs unexpectedly, Decibel 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 Decibel Cannabis will offset losses from the drop in Decibel Cannabis' long position.| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
| Decibel Cannabis vs. Delta 9 Cannabis | Decibel Cannabis vs. Body and Mind | Decibel Cannabis vs. CLS Holdings USA | Decibel Cannabis vs. Halo Collective |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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