Correlation Between Medical Marijuana and Emergent Health
Can any of the company-specific risk be diversified away by investing in both Medical Marijuana and Emergent Health 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 Emergent Health 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 Emergent Health Corp, you can compare the effects of market volatilities on Medical Marijuana and Emergent Health 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 Emergent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Marijuana and Emergent Health.
Diversification Opportunities for Medical Marijuana and Emergent Health
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Medical and Emergent is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Medical Marijuana I and Emergent Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Health Corp 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 Emergent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Health Corp has no effect on the direction of Medical Marijuana i.e., Medical Marijuana and Emergent Health go up and down completely randomly.
Pair Corralation between Medical Marijuana and Emergent Health
Given the investment horizon of 90 days Medical Marijuana I is expected to under-perform the Emergent Health. In addition to that, Medical Marijuana is 1.84 times more volatile than Emergent Health Corp. It trades about -0.07 of its total potential returns per unit of risk. Emergent Health Corp is currently generating about -0.08 per unit of volatility. If you would invest 0.12 in Emergent Health Corp on August 30, 2024 and sell it today you would lose (0.02) from holding Emergent Health Corp or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Marijuana I vs. Emergent Health Corp
Performance |
| Timeline |
| Medical Marijuana |
| Emergent Health Corp |
Medical Marijuana and Emergent Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Marijuana and Emergent Health
The main advantage of trading using opposite Medical Marijuana and Emergent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Marijuana position performs unexpectedly, Emergent Health 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 Emergent Health will offset losses from the drop in Emergent Health's long position.| Medical Marijuana vs. American Green | Medical Marijuana vs. North American Cannabis | Medical Marijuana vs. Marijuana | Medical Marijuana vs. Rimrock Gold Corp |
| Emergent Health vs. Galexxy Holdings | Emergent Health vs. Integrated Cannabis Solutions | Emergent Health vs. Golden Developing Solutions | Emergent Health vs. Premier Biomedical |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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