Correlation Between Element Solutions and General Cannabis
Can any of the company-specific risk be diversified away by investing in both Element Solutions and General 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 Element Solutions and General Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and General Cannabis Corp, you can compare the effects of market volatilities on Element Solutions and General 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 Element Solutions with a short position of General Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and General Cannabis.
Diversification Opportunities for Element Solutions and General Cannabis
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Element and General is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and General Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Cannabis Corp and Element Solutions 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 Element Solutions are associated (or correlated) with General Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Cannabis Corp has no effect on the direction of Element Solutions i.e., Element Solutions and General Cannabis go up and down completely randomly.
Pair Corralation between Element Solutions and General Cannabis
Considering the 90-day investment horizon Element Solutions is expected to generate 0.16 times more return on investment than General Cannabis. However, Element Solutions is 6.21 times less risky than General Cannabis. It trades about 0.3 of its potential returns per unit of risk. General Cannabis Corp is currently generating about -0.17 per unit of risk. If you would invest 2,667 in Element Solutions on August 28, 2024 and sell it today you would earn a total of 266.00 from holding Element Solutions or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. General Cannabis Corp
Performance |
| Timeline |
| Element Solutions |
| General Cannabis Corp |
Element Solutions and General Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and General Cannabis
The main advantage of trading using opposite Element Solutions and General Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, General 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 General Cannabis will offset losses from the drop in General Cannabis' long position.| Element Solutions vs. Oil Dri | Element Solutions vs. H B Fuller | Element Solutions vs. Northern Technologies | Element Solutions vs. Cabot |
| General Cannabis vs. Element Solutions | General Cannabis vs. Orion Engineered Carbons | General Cannabis vs. Minerals Technologies | General Cannabis vs. Ingevity 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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