Correlation Between Integrated Cannabis and Green Cures
Can any of the company-specific risk be diversified away by investing in both Integrated Cannabis and Green Cures 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 Integrated Cannabis and Green Cures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integrated Cannabis Solutions and Green Cures Botanical, you can compare the effects of market volatilities on Integrated Cannabis and Green Cures 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 Integrated Cannabis with a short position of Green Cures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Cannabis and Green Cures.
Diversification Opportunities for Integrated Cannabis and Green Cures
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Integrated and Green is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Cannabis Solutions and Green Cures Botanical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cures Botanical and Integrated 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 Integrated Cannabis Solutions are associated (or correlated) with Green Cures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cures Botanical has no effect on the direction of Integrated Cannabis i.e., Integrated Cannabis and Green Cures go up and down completely randomly.
Pair Corralation between Integrated Cannabis and Green Cures
Given the investment horizon of 90 days Integrated Cannabis Solutions is expected to under-perform the Green Cures. But the pink sheet apears to be less risky and, when comparing its historical volatility, Integrated Cannabis Solutions is 7.45 times less risky than Green Cures. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Green Cures Botanical is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Green Cures Botanical on August 29, 2024 and sell it today you would lose (0.01) from holding Green Cures Botanical or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Integrated Cannabis Solutions vs. Green Cures Botanical
Performance |
| Timeline |
| Integrated Cannabis |
| Green Cures Botanical |
Integrated Cannabis and Green Cures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integrated Cannabis and Green Cures
The main advantage of trading using opposite Integrated Cannabis and Green Cures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Cannabis position performs unexpectedly, Green Cures 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 Green Cures will offset losses from the drop in Green Cures' long position.The idea behind Integrated Cannabis Solutions and Green Cures Botanical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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