Correlation Between City View and Rubicon Organics
Can any of the company-specific risk be diversified away by investing in both City View and Rubicon Organics 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 City View and Rubicon Organics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City View Green and Rubicon Organics, you can compare the effects of market volatilities on City View and Rubicon Organics 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 City View with a short position of Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of City View and Rubicon Organics.
Diversification Opportunities for City View and Rubicon Organics
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between City and Rubicon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding City View Green and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics and City View 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 City View Green are associated (or correlated) with Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of City View i.e., City View and Rubicon Organics go up and down completely randomly.
Pair Corralation between City View and Rubicon Organics
Assuming the 90 days horizon City View Green is expected to generate 2.48 times more return on investment than Rubicon Organics. However, City View is 2.48 times more volatile than Rubicon Organics. It trades about 0.16 of its potential returns per unit of risk. Rubicon Organics is currently generating about -0.1 per unit of risk. If you would invest 0.51 in City View Green on August 31, 2024 and sell it today you would earn a total of 0.84 from holding City View Green or generate 164.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
City View Green vs. Rubicon Organics
Performance |
| Timeline |
| City View Green |
| Rubicon Organics |
City View and Rubicon Organics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City View and Rubicon Organics
The main advantage of trading using opposite City View and Rubicon Organics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City View position performs unexpectedly, Rubicon Organics 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 Rubicon Organics will offset losses from the drop in Rubicon Organics' long position.| City View vs. Benchmark Botanics | City View vs. Speakeasy Cannabis Club | City View vs. BC Craft Supply | City View vs. Ravenquest Biomed |
| Rubicon Organics vs. Benchmark Botanics | Rubicon Organics vs. Speakeasy Cannabis Club | Rubicon Organics vs. City View Green | Rubicon Organics vs. BC Craft Supply |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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