Correlation Between Cronos and Decibel Cannabis
Can any of the company-specific risk be diversified away by investing in both Cronos 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 Cronos and Decibel Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cronos Group and Decibel Cannabis, you can compare the effects of market volatilities on Cronos 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 Cronos with a short position of Decibel Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cronos and Decibel Cannabis.
Diversification Opportunities for Cronos and Decibel Cannabis
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cronos and Decibel is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cronos Group and Decibel Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decibel Cannabis and Cronos 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 Cronos Group 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 Cronos i.e., Cronos and Decibel Cannabis go up and down completely randomly.
Pair Corralation between Cronos and Decibel Cannabis
Assuming the 90 days trading horizon Cronos is expected to generate 30.46 times less return on investment than Decibel Cannabis. But when comparing it to its historical volatility, Cronos Group is 2.0 times less risky than Decibel Cannabis. It trades about 0.01 of its potential returns per unit of risk. Decibel Cannabis is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Decibel Cannabis on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Decibel Cannabis or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cronos Group vs. Decibel Cannabis
Performance |
| Timeline |
| Cronos Group |
| Decibel Cannabis |
Cronos and Decibel Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cronos and Decibel Cannabis
The main advantage of trading using opposite Cronos and Decibel Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cronos 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.| Cronos vs. Decibel Cannabis | Cronos vs. Cannara Biotech | Cronos vs. iShares Canadian HYBrid | Cronos vs. Altagas Cum Red |
| Decibel Cannabis vs. Cannara Biotech | Decibel Cannabis vs. iShares Canadian HYBrid | Decibel Cannabis vs. Altagas Cum Red | Decibel Cannabis vs. European Residential Real |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |