Correlation Between Medical Marijuana and North American
Can any of the company-specific risk be diversified away by investing in both Medical Marijuana and North American 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 North American 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 North American Cannabis, you can compare the effects of market volatilities on Medical Marijuana and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Marijuana and North American.
Diversification Opportunities for Medical Marijuana and North American
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Medical and North is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Medical Marijuana I and North American Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Cannabis 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Cannabis has no effect on the direction of Medical Marijuana i.e., Medical Marijuana and North American go up and down completely randomly.
Pair Corralation between Medical Marijuana and North American
Given the investment horizon of 90 days Medical Marijuana I is expected to under-perform the North American. But the pink sheet apears to be less risky and, when comparing its historical volatility, Medical Marijuana I is 27.11 times less risky than North American. The pink sheet trades about -0.01 of its potential returns per unit of risk. The North American Cannabis is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 0.01 in North American Cannabis on August 26, 2024 and sell it today you would lose (0.01) from holding North American Cannabis or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.49% |
| Values | Daily Returns |
Medical Marijuana I vs. North American Cannabis
Performance |
| Timeline |
| Medical Marijuana |
| North American Cannabis |
Medical Marijuana and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Marijuana and North American
The main advantage of trading using opposite Medical Marijuana and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Marijuana position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| Medical Marijuana vs. Rezolute | Medical Marijuana vs. Tempest Therapeutics | Medical Marijuana vs. Forte Biosciences | Medical Marijuana vs. Dyadic International |
| North American vs. Green Cures Botanical | North American vs. Galexxy Holdings | North American vs. Indoor Harvest Corp | North American vs. Speakeasy Cannabis Club |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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