Correlation Between Tilray and Real Brands
Can any of the company-specific risk be diversified away by investing in both Tilray and Real Brands 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 Real Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tilray Inc and Real Brands, you can compare the effects of market volatilities on Tilray and Real Brands 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 Real Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tilray and Real Brands.
Diversification Opportunities for Tilray and Real Brands
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tilray and Real is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and Real Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Brands 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 Real Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Brands has no effect on the direction of Tilray i.e., Tilray and Real Brands go up and down completely randomly.
Pair Corralation between Tilray and Real Brands
Given the investment horizon of 90 days Tilray Inc is expected to under-perform the Real Brands. But the stock apears to be less risky and, when comparing its historical volatility, Tilray Inc is 7.98 times less risky than Real Brands. The stock trades about -0.06 of its potential returns per unit of risk. The Real Brands is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.57 in Real Brands on September 3, 2024 and sell it today you would lose (0.56) from holding Real Brands or give up 98.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tilray Inc vs. Real Brands
Performance |
| Timeline |
| Tilray Inc |
| Real Brands |
Tilray and Real Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tilray and Real Brands
The main advantage of trading using opposite Tilray and Real Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tilray position performs unexpectedly, Real Brands 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 Real Brands will offset losses from the drop in Real Brands' long position.The idea behind Tilray Inc and Real Brands 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.| Real Brands vs. American Premium Water | Real Brands vs. Puration | Real Brands vs. Kona Gold Solutions | Real Brands vs. Leafbuyer Technologies |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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