Correlation Between Decibel Cannabis and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both Decibel Cannabis 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 Decibel Cannabis and Cresco Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Decibel Cannabis and Cresco Labs, you can compare the effects of market volatilities on Decibel Cannabis 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 Decibel Cannabis with a short position of Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decibel Cannabis and Cresco Labs.
Diversification Opportunities for Decibel Cannabis and Cresco Labs
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Decibel and Cresco is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Decibel Cannabis and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs 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 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 Decibel Cannabis i.e., Decibel Cannabis and Cresco Labs go up and down completely randomly.
Pair Corralation between Decibel Cannabis and Cresco Labs
Assuming the 90 days horizon Decibel Cannabis is expected to generate 1.11 times more return on investment than Cresco Labs. However, Decibel Cannabis is 1.11 times more volatile than Cresco Labs. It trades about 0.16 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.09 per unit of risk. If you would invest 3.50 in Decibel Cannabis on August 29, 2024 and sell it today you would earn a total of 1.10 from holding Decibel Cannabis or generate 31.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Decibel Cannabis vs. Cresco Labs
Performance |
| Timeline |
| Decibel Cannabis |
| Cresco Labs |
Decibel Cannabis and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Decibel Cannabis and Cresco Labs
The main advantage of trading using opposite Decibel Cannabis and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decibel Cannabis 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.| Decibel Cannabis vs. Delta 9 Cannabis | Decibel Cannabis vs. Body and Mind | Decibel Cannabis vs. CLS Holdings USA | Decibel Cannabis vs. Halo Collective |
| Cresco Labs vs. Green Cures Botanical | Cresco Labs vs. Cann American Corp | Cresco Labs vs. Rimrock Gold Corp | Cresco Labs vs. Galexxy Holdings |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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