Correlation Between CbdMD and Im Cannabis
Can any of the company-specific risk be diversified away by investing in both CbdMD and Im 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 CbdMD and Im Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cbdMD Inc and Im Cannabis Corp, you can compare the effects of market volatilities on CbdMD and Im 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 CbdMD with a short position of Im Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of CbdMD and Im Cannabis.
Diversification Opportunities for CbdMD and Im Cannabis
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CbdMD and IMCC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and Im Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Im Cannabis Corp and CbdMD 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 cbdMD Inc are associated (or correlated) with Im Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Im Cannabis Corp has no effect on the direction of CbdMD i.e., CbdMD and Im Cannabis go up and down completely randomly.
Pair Corralation between CbdMD and Im Cannabis
Assuming the 90 days trading horizon cbdMD Inc is expected to under-perform the Im Cannabis. But the preferred stock apears to be less risky and, when comparing its historical volatility, cbdMD Inc is 2.07 times less risky than Im Cannabis. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Im Cannabis Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 205.00 in Im Cannabis Corp on August 27, 2024 and sell it today you would earn a total of 54.00 from holding Im Cannabis Corp or generate 26.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
cbdMD Inc vs. Im Cannabis Corp
Performance |
| Timeline |
| cbdMD Inc |
| Im Cannabis Corp |
CbdMD and Im Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CbdMD and Im Cannabis
The main advantage of trading using opposite CbdMD and Im Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CbdMD position performs unexpectedly, Im 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 Im Cannabis will offset losses from the drop in Im Cannabis' long position.The idea behind cbdMD Inc and Im Cannabis Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Im Cannabis vs. Clever Leaves Holdings | Im Cannabis vs. Khiron Life Sciences | Im Cannabis vs. Allied Corp | Im Cannabis vs. Biofrontera |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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