Correlation Between 22nd Century and VPR Brands
Can any of the company-specific risk be diversified away by investing in both 22nd Century and VPR Brands 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 VPR Brands 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 VPR Brands LP, you can compare the effects of market volatilities on 22nd Century and VPR Brands 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 VPR Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22nd Century and VPR Brands.
Diversification Opportunities for 22nd Century and VPR Brands
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 22nd and VPR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding 22nd Century Group and VPR Brands LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VPR Brands LP 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 VPR Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VPR Brands LP has no effect on the direction of 22nd Century i.e., 22nd Century and VPR Brands go up and down completely randomly.
Pair Corralation between 22nd Century and VPR Brands
Given the investment horizon of 90 days 22nd Century Group is expected to under-perform the VPR Brands. In addition to that, 22nd Century is 1.15 times more volatile than VPR Brands LP. It trades about -0.12 of its total potential returns per unit of risk. VPR Brands LP is currently generating about 0.03 per unit of volatility. If you would invest 7.60 in VPR Brands LP on September 3, 2024 and sell it today you would lose (3.00) from holding VPR Brands LP or give up 39.47% 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. VPR Brands LP
Performance |
| Timeline |
| 22nd Century Group |
| VPR Brands LP |
22nd Century and VPR Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 22nd Century and VPR Brands
The main advantage of trading using opposite 22nd Century and VPR Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22nd Century position performs unexpectedly, VPR Brands 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 VPR Brands will offset losses from the drop in VPR Brands' long position.| 22nd Century vs. Turning Point Brands | 22nd Century vs. Green Globe International | 22nd Century vs. Imperial Brands PLC | 22nd Century vs. Kaival Brands Innovations |
| VPR Brands vs. 22nd Century Group | VPR Brands vs. Turning Point Brands | VPR Brands vs. Green Globe International | VPR Brands vs. Imperial Brands PLC |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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