Correlation Between Greater Cannabis and Leef Brands
Can any of the company-specific risk be diversified away by investing in both Greater Cannabis and Leef Brands 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 Leef Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greater Cannabis and Leef Brands, you can compare the effects of market volatilities on Greater Cannabis and Leef Brands 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 Leef Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greater Cannabis and Leef Brands.
Diversification Opportunities for Greater Cannabis and Leef Brands
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Greater and Leef is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands 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 Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Leef Brands go up and down completely randomly.
Pair Corralation between Greater Cannabis and Leef Brands
Given the investment horizon of 90 days Greater Cannabis is expected to generate 1.88 times less return on investment than Leef Brands. But when comparing it to its historical volatility, Greater Cannabis is 1.01 times less risky than Leef Brands. It trades about 0.04 of its potential returns per unit of risk. Leef Brands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Leef Brands on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Leef Brands or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greater Cannabis vs. Leef Brands
Performance |
| Timeline |
| Greater Cannabis |
| Leef Brands |
Greater Cannabis and Leef Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greater Cannabis and Leef Brands
The main advantage of trading using opposite Greater Cannabis and Leef Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greater Cannabis position performs unexpectedly, Leef Brands 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 Leef Brands will offset losses from the drop in Leef Brands' 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 |
| Leef Brands vs. Hasbro Inc | Leef Brands vs. Emerson Radio | Leef Brands vs. Playtech plc | Leef Brands vs. Cumberland Pharmaceuticals |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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