Correlation Between Medical Cannabis and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Medical Cannabis and Dow Jones 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 Cannabis and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Cannabis Pay and Dow Jones Industrial, you can compare the effects of market volatilities on Medical Cannabis and Dow Jones 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 Cannabis with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Cannabis and Dow Jones.
Diversification Opportunities for Medical Cannabis and Dow Jones
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Medical and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Medical Cannabis Pay and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Medical Cannabis 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 Cannabis Pay are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Medical Cannabis i.e., Medical Cannabis and Dow Jones go up and down completely randomly.
Pair Corralation between Medical Cannabis and Dow Jones
Given the investment horizon of 90 days Medical Cannabis Pay is expected to generate 25.58 times more return on investment than Dow Jones. However, Medical Cannabis is 25.58 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 0.01 in Medical Cannabis Pay on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Medical Cannabis Pay or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Medical Cannabis Pay vs. Dow Jones Industrial
Performance |
| Timeline |
Medical Cannabis and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Medical Cannabis Pay
Pair trading matchups for Medical Cannabis
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Medical Cannabis and Dow Jones
The main advantage of trading using opposite Medical Cannabis and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Cannabis position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Medical Cannabis vs. Nouveau Life Pharmaceuticals | Medical Cannabis vs. PPJ Healthcare Enterprises | Medical Cannabis vs. eWellness Healthcare Corp | Medical Cannabis vs. M3 Inc |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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