Correlation Between Marimed and AYR Strategies
Can any of the company-specific risk be diversified away by investing in both Marimed and AYR Strategies 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 Marimed and AYR Strategies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marimed and AYR Strategies Class, you can compare the effects of market volatilities on Marimed and AYR Strategies 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 Marimed with a short position of AYR Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimed and AYR Strategies.
Diversification Opportunities for Marimed and AYR Strategies
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Marimed and AYR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Marimed and AYR Strategies Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYR Strategies Class and Marimed 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 Marimed are associated (or correlated) with AYR Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYR Strategies Class has no effect on the direction of Marimed i.e., Marimed and AYR Strategies go up and down completely randomly.
Pair Corralation between Marimed and AYR Strategies
Given the investment horizon of 90 days Marimed is expected to generate 0.47 times more return on investment than AYR Strategies. However, Marimed is 2.15 times less risky than AYR Strategies. It trades about -0.06 of its potential returns per unit of risk. AYR Strategies Class is currently generating about -0.32 per unit of risk. If you would invest 17.00 in Marimed on August 28, 2024 and sell it today you would lose (2.00) from holding Marimed or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marimed vs. AYR Strategies Class
Performance |
| Timeline |
| Marimed |
| AYR Strategies Class |
Marimed and AYR Strategies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marimed and AYR Strategies
The main advantage of trading using opposite Marimed and AYR Strategies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marimed position performs unexpectedly, AYR Strategies 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 AYR Strategies will offset losses from the drop in AYR Strategies' long position.The idea behind Marimed and AYR Strategies Class 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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