Correlation Between West Island and Decibel Cannabis
Can any of the company-specific risk be diversified away by investing in both West Island and Decibel 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 West Island and Decibel Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West Island Brands and Decibel Cannabis, you can compare the effects of market volatilities on West Island and Decibel 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 West Island with a short position of Decibel Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of West Island and Decibel Cannabis.
Diversification Opportunities for West Island and Decibel Cannabis
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between West and Decibel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding West Island Brands and Decibel Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decibel Cannabis and West Island 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 West Island Brands are associated (or correlated) with Decibel Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decibel Cannabis has no effect on the direction of West Island i.e., West Island and Decibel Cannabis go up and down completely randomly.
Pair Corralation between West Island and Decibel Cannabis
Assuming the 90 days horizon West Island Brands is expected to generate 13.18 times more return on investment than Decibel Cannabis. However, West Island is 13.18 times more volatile than Decibel Cannabis. It trades about 0.08 of its potential returns per unit of risk. Decibel Cannabis is currently generating about -0.02 per unit of risk. If you would invest 0.06 in West Island Brands on August 29, 2024 and sell it today you would earn a total of 0.29 from holding West Island Brands or generate 483.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
West Island Brands vs. Decibel Cannabis
Performance |
| Timeline |
| West Island Brands |
| Decibel Cannabis |
West Island and Decibel Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West Island and Decibel Cannabis
The main advantage of trading using opposite West Island and Decibel Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West Island position performs unexpectedly, Decibel 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 Decibel Cannabis will offset losses from the drop in Decibel Cannabis' long position.| West Island vs. Canopy Growth Corp | West Island vs. Tilray Inc | West Island vs. Cronos Group | West Island vs. SNDL Inc |
| Decibel Cannabis vs. Delta 9 Cannabis | Decibel Cannabis vs. Body and Mind | Decibel Cannabis vs. CLS Holdings USA | Decibel Cannabis vs. Halo Collective |
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.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |