Correlation Between 22nd Century and Oragenics
Can any of the company-specific risk be diversified away by investing in both 22nd Century and Oragenics 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 22nd Century and Oragenics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 22nd Century Group and Oragenics, you can compare the effects of market volatilities on 22nd Century and Oragenics 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 22nd Century with a short position of Oragenics. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22nd Century and Oragenics.
Diversification Opportunities for 22nd Century and Oragenics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 22nd and Oragenics is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding 22nd Century Group and Oragenics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oragenics and 22nd Century 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 22nd Century Group are associated (or correlated) with Oragenics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oragenics has no effect on the direction of 22nd Century i.e., 22nd Century and Oragenics go up and down completely randomly.
Pair Corralation between 22nd Century and Oragenics
Given the investment horizon of 90 days 22nd Century Group is expected to under-perform the Oragenics. But the stock apears to be less risky and, when comparing its historical volatility, 22nd Century Group is 1.21 times less risky than Oragenics. The stock trades about -0.18 of its potential returns per unit of risk. The Oragenics is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 207.00 in Oragenics on August 30, 2024 and sell it today you would lose (178.00) from holding Oragenics or give up 85.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
22nd Century Group vs. Oragenics
Performance |
| Timeline |
| 22nd Century Group |
| Oragenics |
22nd Century and Oragenics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 22nd Century and Oragenics
The main advantage of trading using opposite 22nd Century and Oragenics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22nd Century position performs unexpectedly, Oragenics 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 Oragenics will offset losses from the drop in Oragenics' long position.| 22nd Century vs. Universal | 22nd Century vs. Imperial Brands PLC | 22nd Century vs. British American Tobacco | 22nd Century vs. Philip Morris 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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