Correlation Between Medical Marijuana and Marijuana
Can any of the company-specific risk be diversified away by investing in both Medical Marijuana and Marijuana 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 Marijuana 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 Marijuana, you can compare the effects of market volatilities on Medical Marijuana and Marijuana 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 Marijuana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Marijuana and Marijuana.
Diversification Opportunities for Medical Marijuana and Marijuana
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Medical and Marijuana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Medical Marijuana I and Marijuana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marijuana 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 Marijuana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marijuana has no effect on the direction of Medical Marijuana i.e., Medical Marijuana and Marijuana go up and down completely randomly.
Pair Corralation between Medical Marijuana and Marijuana
Given the investment horizon of 90 days Medical Marijuana I is expected to under-perform the Marijuana. But the pink sheet apears to be less risky and, when comparing its historical volatility, Medical Marijuana I is 19.11 times less risky than Marijuana. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Marijuana is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Marijuana on September 1, 2024 and sell it today you would lose (0.01) from holding Marijuana or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Medical Marijuana I vs. Marijuana
Performance |
| Timeline |
| Medical Marijuana |
| Marijuana |
Medical Marijuana and Marijuana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Marijuana and Marijuana
The main advantage of trading using opposite Medical Marijuana and Marijuana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Marijuana position performs unexpectedly, Marijuana 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 Marijuana will offset losses from the drop in Marijuana's long position.| Medical Marijuana vs. Brainsway | Medical Marijuana vs. Venus Concept | Medical Marijuana vs. Tactile Systems Technology | Medical Marijuana vs. Icecure Medical |
| Marijuana vs. Priority Aviation | Marijuana vs. Cbd Life Sciences | Marijuana vs. Hemp Inc | Marijuana vs. Emergent Health Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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