Correlation Between Medical Marijuana and Cannabis Global
Can any of the company-specific risk be diversified away by investing in both Medical Marijuana and Cannabis Global 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 Medical Marijuana and Cannabis Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Marijuana I and Cannabis Global, you can compare the effects of market volatilities on Medical Marijuana and Cannabis Global 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 Medical Marijuana with a short position of Cannabis Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Marijuana and Cannabis Global.
Diversification Opportunities for Medical Marijuana and Cannabis Global
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Medical and Cannabis is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Medical Marijuana I and Cannabis Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannabis Global and Medical Marijuana 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 Medical Marijuana I are associated (or correlated) with Cannabis Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannabis Global has no effect on the direction of Medical Marijuana i.e., Medical Marijuana and Cannabis Global go up and down completely randomly.
Pair Corralation between Medical Marijuana and Cannabis Global
Given the investment horizon of 90 days Medical Marijuana I is expected to under-perform the Cannabis Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, Medical Marijuana I is 22.1 times less risky than Cannabis Global. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Cannabis Global is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.05 in Cannabis Global on August 29, 2024 and sell it today you would lose (0.04) from holding Cannabis Global or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Medical Marijuana I vs. Cannabis Global
Performance |
| Timeline |
| Medical Marijuana |
| Cannabis Global |
Medical Marijuana and Cannabis Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Marijuana and Cannabis Global
The main advantage of trading using opposite Medical Marijuana and Cannabis Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Marijuana position performs unexpectedly, Cannabis Global 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 Cannabis Global will offset losses from the drop in Cannabis Global's long position.| Medical Marijuana vs. American Green | Medical Marijuana vs. North American Cannabis | Medical Marijuana vs. Marijuana | Medical Marijuana vs. Rimrock Gold Corp |
| Cannabis Global vs. Green Cures Botanical | Cannabis Global vs. Cann American Corp | Cannabis Global vs. Rimrock Gold Corp | Cannabis Global vs. Galexxy Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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