Correlation Between Greater Cannabis and Covalon Technologies
Can any of the company-specific risk be diversified away by investing in both Greater Cannabis and Covalon Technologies 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 Greater Cannabis and Covalon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greater Cannabis and Covalon Technologies, you can compare the effects of market volatilities on Greater Cannabis and Covalon Technologies 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 Greater Cannabis with a short position of Covalon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greater Cannabis and Covalon Technologies.
Diversification Opportunities for Greater Cannabis and Covalon Technologies
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Greater and Covalon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Covalon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covalon Technologies and Greater 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 Greater Cannabis are associated (or correlated) with Covalon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covalon Technologies has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Covalon Technologies go up and down completely randomly.
Pair Corralation between Greater Cannabis and Covalon Technologies
Given the investment horizon of 90 days Greater Cannabis is expected to generate 2.51 times more return on investment than Covalon Technologies. However, Greater Cannabis is 2.51 times more volatile than Covalon Technologies. It trades about 0.05 of its potential returns per unit of risk. Covalon Technologies is currently generating about 0.1 per unit of risk. If you would invest 0.07 in Greater Cannabis on September 14, 2024 and sell it today you would lose (0.03) from holding Greater Cannabis or give up 42.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greater Cannabis vs. Covalon Technologies
Performance |
| Timeline |
| Greater Cannabis |
| Covalon Technologies |
Greater Cannabis and Covalon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greater Cannabis and Covalon Technologies
The main advantage of trading using opposite Greater Cannabis and Covalon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greater Cannabis position performs unexpectedly, Covalon Technologies 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 Covalon Technologies will offset losses from the drop in Covalon Technologies' long position.| Greater Cannabis vs. Global Hemp Group | Greater Cannabis vs. Cannabis Suisse Corp | Greater Cannabis vs. Maple Leaf Green | Greater Cannabis vs. Mc Endvrs |
| Covalon Technologies vs. Grey Cloak Tech | Covalon Technologies vs. CuraScientific Corp | Covalon Technologies vs. Love Hemp Group | Covalon Technologies vs. Greater Cannabis |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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