Correlation Between TOMI Environmental and General Cannabis
Can any of the company-specific risk be diversified away by investing in both TOMI Environmental and General 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 TOMI Environmental and General Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOMI Environmental Solutions and General Cannabis Corp, you can compare the effects of market volatilities on TOMI Environmental and General 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 TOMI Environmental with a short position of General Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOMI Environmental and General Cannabis.
Diversification Opportunities for TOMI Environmental and General Cannabis
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TOMI and General is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding TOMI Environmental Solutions and General Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Cannabis Corp and TOMI Environmental 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 TOMI Environmental Solutions are associated (or correlated) with General Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Cannabis Corp has no effect on the direction of TOMI Environmental i.e., TOMI Environmental and General Cannabis go up and down completely randomly.
Pair Corralation between TOMI Environmental and General Cannabis
Given the investment horizon of 90 days TOMI Environmental Solutions is expected to generate 0.55 times more return on investment than General Cannabis. However, TOMI Environmental Solutions is 1.82 times less risky than General Cannabis. It trades about -0.02 of its potential returns per unit of risk. General Cannabis Corp is currently generating about -0.05 per unit of risk. If you would invest 80.00 in TOMI Environmental Solutions on September 5, 2024 and sell it today you would lose (8.00) from holding TOMI Environmental Solutions or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
TOMI Environmental Solutions vs. General Cannabis Corp
Performance |
| Timeline |
| TOMI Environmental |
| General Cannabis Corp |
TOMI Environmental and General Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOMI Environmental and General Cannabis
The main advantage of trading using opposite TOMI Environmental and General Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOMI Environmental position performs unexpectedly, General 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 General Cannabis will offset losses from the drop in General Cannabis' long position.| TOMI Environmental vs. CRA International | TOMI Environmental vs. ICF International | TOMI Environmental vs. Forrester Research | TOMI Environmental vs. Huron Consulting Group |
| General Cannabis vs. TOMI Environmental Solutions | General Cannabis vs. SCOR PK | General Cannabis vs. HUMANA INC | General Cannabis vs. Aquagold International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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