Correlation Between North American and BZAM
Can any of the company-specific risk be diversified away by investing in both North American and BZAM 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 North American and BZAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Cannabis and BZAM, you can compare the effects of market volatilities on North American and BZAM 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 North American with a short position of BZAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and BZAM.
Diversification Opportunities for North American and BZAM
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between North and BZAM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding North American Cannabis and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM and North American 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 North American Cannabis are associated (or correlated) with BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of North American i.e., North American and BZAM go up and down completely randomly.
Pair Corralation between North American and BZAM
If you would invest 0.01 in BZAM on August 26, 2024 and sell it today you would lose (0.01) from holding BZAM or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Cannabis vs. BZAM
Performance |
| Timeline |
| North American Cannabis |
| BZAM |
North American and BZAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and BZAM
The main advantage of trading using opposite North American and BZAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, BZAM 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 BZAM will offset losses from the drop in BZAM's long position.| North American vs. Cbd Life Sciences | North American vs. FutureWorld Corp | North American vs. Now Corp | North American vs. For The Earth |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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