Correlation Between Real Brands and Greater Cannabis
Can any of the company-specific risk be diversified away by investing in both Real Brands and Greater Cannabis 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 Real Brands and Greater Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Brands and Greater Cannabis, you can compare the effects of market volatilities on Real Brands and Greater Cannabis 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 Real Brands with a short position of Greater Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Brands and Greater Cannabis.
Diversification Opportunities for Real Brands and Greater Cannabis
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Real and Greater is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Real Brands and Greater Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greater Cannabis and Real Brands 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 Real Brands are associated (or correlated) with Greater Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greater Cannabis has no effect on the direction of Real Brands i.e., Real Brands and Greater Cannabis go up and down completely randomly.
Pair Corralation between Real Brands and Greater Cannabis
Given the investment horizon of 90 days Real Brands is expected to generate 1.67 times more return on investment than Greater Cannabis. However, Real Brands is 1.67 times more volatile than Greater Cannabis. It trades about 0.07 of its potential returns per unit of risk. Greater Cannabis is currently generating about 0.04 per unit of risk. If you would invest 0.33 in Real Brands on August 29, 2024 and sell it today you would lose (0.32) from holding Real Brands or give up 96.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Brands vs. Greater Cannabis
Performance |
| Timeline |
| Real Brands |
| Greater Cannabis |
Real Brands and Greater Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Brands and Greater Cannabis
The main advantage of trading using opposite Real Brands and Greater Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Brands position performs unexpectedly, Greater Cannabis 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 Greater Cannabis will offset losses from the drop in Greater Cannabis' long position.| Real Brands vs. American Premium Water | Real Brands vs. Puration | Real Brands vs. Kona Gold Solutions | Real Brands vs. Leafbuyer Technologies |
| Greater Cannabis vs. Global Hemp Group | Greater Cannabis vs. Cannabis Suisse Corp | Greater Cannabis vs. Maple Leaf Green | Greater Cannabis vs. Mc Endvrs |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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