Correlation Between Sack Lunch and American Cannabis
Can any of the company-specific risk be diversified away by investing in both Sack Lunch and American 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 Sack Lunch and American Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sack Lunch Productions and American Cannabis, you can compare the effects of market volatilities on Sack Lunch and American 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 Sack Lunch with a short position of American Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sack Lunch and American Cannabis.
Diversification Opportunities for Sack Lunch and American Cannabis
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sack and American is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sack Lunch Productions and American Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Cannabis and Sack Lunch 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 Sack Lunch Productions are associated (or correlated) with American Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Cannabis has no effect on the direction of Sack Lunch i.e., Sack Lunch and American Cannabis go up and down completely randomly.
Pair Corralation between Sack Lunch and American Cannabis
Given the investment horizon of 90 days Sack Lunch is expected to generate 10.49 times less return on investment than American Cannabis. But when comparing it to its historical volatility, Sack Lunch Productions is 7.44 times less risky than American Cannabis. It trades about 0.15 of its potential returns per unit of risk. American Cannabis is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.02 in American Cannabis on August 25, 2024 and sell it today you would earn a total of 0.00 from holding American Cannabis or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sack Lunch Productions vs. American Cannabis
Performance |
| Timeline |
| Sack Lunch Productions |
| American Cannabis |
Sack Lunch and American Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sack Lunch and American Cannabis
The main advantage of trading using opposite Sack Lunch and American Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sack Lunch position performs unexpectedly, American 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 American Cannabis will offset losses from the drop in American Cannabis' long position.| Sack Lunch vs. Aerius International | Sack Lunch vs. Potash America | Sack Lunch vs. Blue Diamond Ventures | Sack Lunch vs. Daniels Corporate Advisory |
| American Cannabis vs. AimRite Holdings Corp | American Cannabis vs. Sack Lunch Productions | American Cannabis vs. American Diversified Holdings | American Cannabis vs. Booz Allen Hamilton |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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