Correlation Between Decibel Cannabis and Cronos
Can any of the company-specific risk be diversified away by investing in both Decibel Cannabis and Cronos 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 Decibel Cannabis and Cronos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Decibel Cannabis and Cronos Group, you can compare the effects of market volatilities on Decibel Cannabis and Cronos 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 Decibel Cannabis with a short position of Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decibel Cannabis and Cronos.
Diversification Opportunities for Decibel Cannabis and Cronos
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Decibel and Cronos is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Decibel Cannabis and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group and Decibel Cannabis 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 Decibel Cannabis are associated (or correlated) with Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos Group has no effect on the direction of Decibel Cannabis i.e., Decibel Cannabis and Cronos go up and down completely randomly.
Pair Corralation between Decibel Cannabis and Cronos
Given the investment horizon of 90 days Decibel Cannabis is expected to generate 1.85 times more return on investment than Cronos. However, Decibel Cannabis is 1.85 times more volatile than Cronos Group. It trades about 0.0 of its potential returns per unit of risk. Cronos Group is currently generating about -0.01 per unit of risk. If you would invest 7.00 in Decibel Cannabis on September 2, 2024 and sell it today you would lose (0.50) from holding Decibel Cannabis or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Decibel Cannabis vs. Cronos Group
Performance |
| Timeline |
| Decibel Cannabis |
| Cronos Group |
Decibel Cannabis and Cronos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Decibel Cannabis and Cronos
The main advantage of trading using opposite Decibel Cannabis and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decibel Cannabis position performs unexpectedly, Cronos 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 Cronos will offset losses from the drop in Cronos' long position.| Decibel Cannabis vs. iShares Canadian HYBrid | Decibel Cannabis vs. Altagas Cum Red | Decibel Cannabis vs. European Residential Real | Decibel Cannabis vs. iShares Fundamental Hedged |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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