Correlation Between Prestige Brand and Ascend Wellness
Can any of the company-specific risk be diversified away by investing in both Prestige Brand and Ascend Wellness 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 Prestige Brand and Ascend Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Brand Holdings and Ascend Wellness Holdings, you can compare the effects of market volatilities on Prestige Brand and Ascend Wellness 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 Prestige Brand with a short position of Ascend Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and Ascend Wellness.
Diversification Opportunities for Prestige Brand and Ascend Wellness
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prestige and Ascend is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and Ascend Wellness Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascend Wellness Holdings and Prestige Brand 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 Prestige Brand Holdings are associated (or correlated) with Ascend Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascend Wellness Holdings has no effect on the direction of Prestige Brand i.e., Prestige Brand and Ascend Wellness go up and down completely randomly.
Pair Corralation between Prestige Brand and Ascend Wellness
Considering the 90-day investment horizon Prestige Brand Holdings is expected to generate 0.85 times more return on investment than Ascend Wellness. However, Prestige Brand Holdings is 1.18 times less risky than Ascend Wellness. It trades about 0.24 of its potential returns per unit of risk. Ascend Wellness Holdings is currently generating about -0.04 per unit of risk. If you would invest 7,438 in Prestige Brand Holdings on November 9, 2024 and sell it today you would earn a total of 1,297 from holding Prestige Brand Holdings or generate 17.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Brand Holdings vs. Ascend Wellness Holdings
Performance |
| Timeline |
| Prestige Brand Holdings |
| Ascend Wellness Holdings |
Prestige Brand and Ascend Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Brand and Ascend Wellness
The main advantage of trading using opposite Prestige Brand and Ascend Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand position performs unexpectedly, Ascend Wellness 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 Ascend Wellness will offset losses from the drop in Ascend Wellness' long position.| Prestige Brand vs. Evotec SE ADR | Prestige Brand vs. Supernus Pharmaceuticals | Prestige Brand vs. Collegium Pharmaceutical | Prestige Brand vs. Regencell Bioscience Holdings |
| Ascend Wellness vs. Verano Holdings Corp | Ascend Wellness vs. Green Thumb Industries | Ascend Wellness vs. AYR Strategies Class | Ascend Wellness vs. Trulieve Cannabis 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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