Correlation Between Medical Cannabis and GE HealthCare
Can any of the company-specific risk be diversified away by investing in both Medical Cannabis and GE HealthCare 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 GE HealthCare 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 GE HealthCare Technologies, you can compare the effects of market volatilities on Medical Cannabis and GE HealthCare 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 GE HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Cannabis and GE HealthCare.
Diversification Opportunities for Medical Cannabis and GE HealthCare
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Medical and GEHC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Medical Cannabis Pay and GE HealthCare Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE HealthCare Techno 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 GE HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE HealthCare Techno has no effect on the direction of Medical Cannabis i.e., Medical Cannabis and GE HealthCare go up and down completely randomly.
Pair Corralation between Medical Cannabis and GE HealthCare
Given the investment horizon of 90 days Medical Cannabis Pay is expected to generate 95.16 times more return on investment than GE HealthCare. However, Medical Cannabis is 95.16 times more volatile than GE HealthCare Technologies. It trades about 0.17 of its potential returns per unit of risk. GE HealthCare Technologies is currently generating about 0.04 per unit of risk. If you would invest 0.23 in Medical Cannabis Pay on September 1, 2024 and sell it today you would lose (0.22) from holding Medical Cannabis Pay or give up 95.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.39% |
| Values | Daily Returns |
Medical Cannabis Pay vs. GE HealthCare Technologies
Performance |
| Timeline |
| Medical Cannabis Pay |
| GE HealthCare Techno |
Medical Cannabis and GE HealthCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Cannabis and GE HealthCare
The main advantage of trading using opposite Medical Cannabis and GE HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Cannabis position performs unexpectedly, GE HealthCare 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 GE HealthCare will offset losses from the drop in GE HealthCare's long position.| Medical Cannabis vs. GE HealthCare Technologies | Medical Cannabis vs. Veeva Systems Class | Medical Cannabis vs. M3 Inc | Medical Cannabis vs. Solventum Corp |
| GE HealthCare vs. Profound Medical Corp | GE HealthCare vs. Si Bone | GE HealthCare vs. Nevro Corp | GE HealthCare vs. Paragon 28 |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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