Correlation Between THC Therapeutics and Item 9
Can any of the company-specific risk be diversified away by investing in both THC Therapeutics and Item 9 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 THC Therapeutics and Item 9 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THC Therapeutics and Item 9 Labs, you can compare the effects of market volatilities on THC Therapeutics and Item 9 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 THC Therapeutics with a short position of Item 9. Check out your portfolio center. Please also check ongoing floating volatility patterns of THC Therapeutics and Item 9.
Diversification Opportunities for THC Therapeutics and Item 9
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between THC and Item is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding THC Therapeutics and Item 9 Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Item 9 Labs and THC Therapeutics 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 THC Therapeutics are associated (or correlated) with Item 9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Item 9 Labs has no effect on the direction of THC Therapeutics i.e., THC Therapeutics and Item 9 go up and down completely randomly.
Pair Corralation between THC Therapeutics and Item 9
Given the investment horizon of 90 days THC Therapeutics is expected to generate 1.11 times less return on investment than Item 9. But when comparing it to its historical volatility, THC Therapeutics is 1.23 times less risky than Item 9. It trades about 0.07 of its potential returns per unit of risk. Item 9 Labs is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7.05 in Item 9 Labs on November 27, 2024 and sell it today you would lose (7.04) from holding Item 9 Labs or give up 99.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.68% |
| Values | Daily Returns |
THC Therapeutics vs. Item 9 Labs
Performance |
| Timeline |
| THC Therapeutics |
| Item 9 Labs |
THC Therapeutics and Item 9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THC Therapeutics and Item 9
The main advantage of trading using opposite THC Therapeutics and Item 9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THC Therapeutics position performs unexpectedly, Item 9 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 Item 9 will offset losses from the drop in Item 9's long position.| THC Therapeutics vs. BlackRock Science Tech | THC Therapeutics vs. Blackrock Innovation Growth | THC Therapeutics vs. Virtus Allianzgi Artificial | THC Therapeutics vs. Highland Floating Rate |
| Item 9 vs. C21 Investments | Item 9 vs. Delta 9 Cannabis | Item 9 vs. Halo Collective | Item 9 vs. Willow Biosciences |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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