Correlation Between Tilray and Lannett
Can any of the company-specific risk be diversified away by investing in both Tilray and Lannett 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 Tilray and Lannett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tilray Inc and Lannett Company, you can compare the effects of market volatilities on Tilray and Lannett 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 Tilray with a short position of Lannett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tilray and Lannett.
Diversification Opportunities for Tilray and Lannett
Pay attention - limited upside
The 3 months correlation between Tilray and Lannett is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and Lannett Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lannett Company and Tilray 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 Tilray Inc are associated (or correlated) with Lannett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lannett Company has no effect on the direction of Tilray i.e., Tilray and Lannett go up and down completely randomly.
Pair Corralation between Tilray and Lannett
If you would invest (100.00) in Lannett Company on August 29, 2024 and sell it today you would earn a total of 100.00 from holding Lannett Company or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Tilray Inc vs. Lannett Company
Performance |
| Timeline |
| Tilray Inc |
| Lannett Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tilray and Lannett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tilray and Lannett
The main advantage of trading using opposite Tilray and Lannett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tilray position performs unexpectedly, Lannett 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 Lannett will offset losses from the drop in Lannett's long position.The idea behind Tilray Inc and Lannett Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lannett vs. Celsius Holdings | Lannett vs. Tianjin Capital Environmental | Lannett vs. CECO Environmental Corp | Lannett vs. Bridgford Foods |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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