Correlation Between North American and Emergent Health
Can any of the company-specific risk be diversified away by investing in both North American and Emergent Health 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 Emergent Health 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 Emergent Health Corp, you can compare the effects of market volatilities on North American and Emergent Health 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 Emergent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Emergent Health.
Diversification Opportunities for North American and Emergent Health
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between North and Emergent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding North American Cannabis and Emergent Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Health Corp 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 Emergent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Health Corp has no effect on the direction of North American i.e., North American and Emergent Health go up and down completely randomly.
Pair Corralation between North American and Emergent Health
Given the investment horizon of 90 days North American Cannabis is expected to generate 12.21 times more return on investment than Emergent Health. However, North American is 12.21 times more volatile than Emergent Health Corp. It trades about 0.11 of its potential returns per unit of risk. Emergent Health Corp is currently generating about 0.02 per unit of risk. If you would invest 0.00 in North American Cannabis on September 1, 2024 and sell it today you would earn a total of 0.00 from holding North American Cannabis or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Cannabis vs. Emergent Health Corp
Performance |
| Timeline |
| North American Cannabis |
| Emergent Health Corp |
North American and Emergent Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Emergent Health
The main advantage of trading using opposite North American and Emergent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Emergent Health 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 Emergent Health will offset losses from the drop in Emergent Health'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 |
| Emergent Health vs. Holloman Energy Corp | Emergent Health vs. cbdMD Inc | Emergent Health vs. Evolus Inc | Emergent Health vs. CV Sciences |
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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