Correlation Between American Green and Marijuana
Can any of the company-specific risk be diversified away by investing in both American Green and Marijuana 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 American Green and Marijuana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Green and Marijuana, you can compare the effects of market volatilities on American Green and Marijuana 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 American Green with a short position of Marijuana. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Green and Marijuana.
Diversification Opportunities for American Green and Marijuana
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Marijuana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Green and Marijuana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marijuana and American Green 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 American Green are associated (or correlated) with Marijuana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marijuana has no effect on the direction of American Green i.e., American Green and Marijuana go up and down completely randomly.
Pair Corralation between American Green and Marijuana
Given the investment horizon of 90 days American Green is expected to generate 0.84 times more return on investment than Marijuana. However, American Green is 1.19 times less risky than Marijuana. It trades about 0.18 of its potential returns per unit of risk. Marijuana is currently generating about -0.22 per unit of risk. If you would invest 0.04 in American Green on September 1, 2024 and sell it today you would earn a total of 0.02 from holding American Green or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Green vs. Marijuana
Performance |
| Timeline |
| American Green |
| Marijuana |
American Green and Marijuana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Green and Marijuana
The main advantage of trading using opposite American Green and Marijuana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Green position performs unexpectedly, Marijuana 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 Marijuana will offset losses from the drop in Marijuana's long position.| American Green vs. Greengro Tech | American Green vs. Growlife | American Green vs. Hemp Inc | American Green vs. Easton Pharmaceutica |
| Marijuana vs. Priority Aviation | Marijuana vs. Cbd Life Sciences | Marijuana vs. Hemp Inc | Marijuana vs. Emergent Health Corp |
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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