Correlation Between Greater Cannabis and Eisai
Can any of the company-specific risk be diversified away by investing in both Greater Cannabis and Eisai 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 Eisai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greater Cannabis and Eisai Co, you can compare the effects of market volatilities on Greater Cannabis and Eisai 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 Eisai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greater Cannabis and Eisai.
Diversification Opportunities for Greater Cannabis and Eisai
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Greater and Eisai is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai 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 Eisai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Eisai go up and down completely randomly.
Pair Corralation between Greater Cannabis and Eisai
Given the investment horizon of 90 days Greater Cannabis is expected to generate 3.37 times more return on investment than Eisai. However, Greater Cannabis is 3.37 times more volatile than Eisai Co. It trades about 0.06 of its potential returns per unit of risk. Eisai Co is currently generating about -0.08 per unit of risk. If you would invest 0.07 in Greater Cannabis on August 25, 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 Together |
| Strength | Significant |
| Accuracy | 92.15% |
| Values | Daily Returns |
Greater Cannabis vs. Eisai Co
Performance |
| Timeline |
| Greater Cannabis |
| Eisai |
Greater Cannabis and Eisai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greater Cannabis and Eisai
The main advantage of trading using opposite Greater Cannabis and Eisai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greater Cannabis position performs unexpectedly, Eisai 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 Eisai will offset losses from the drop in Eisai's 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 |
| Eisai vs. Copa Holdings SA | Eisai vs. United Airlines Holdings | Eisai vs. Delta Air Lines | Eisai vs. SkyWest |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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