Correlation Between CbdMD and Biome Grow
Can any of the company-specific risk be diversified away by investing in both CbdMD and Biome Grow 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 Biome Grow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cbdMD Inc and Biome Grow, you can compare the effects of market volatilities on CbdMD and Biome Grow 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 Biome Grow. Check out your portfolio center. Please also check ongoing floating volatility patterns of CbdMD and Biome Grow.
Diversification Opportunities for CbdMD and Biome Grow
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CbdMD and Biome is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and Biome Grow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biome Grow 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 Biome Grow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biome Grow has no effect on the direction of CbdMD i.e., CbdMD and Biome Grow go up and down completely randomly.
Pair Corralation between CbdMD and Biome Grow
Given the investment horizon of 90 days cbdMD Inc is expected to under-perform the Biome Grow. But the stock apears to be less risky and, when comparing its historical volatility, cbdMD Inc is 8.79 times less risky than Biome Grow. The stock trades about -0.03 of its potential returns per unit of risk. The Biome Grow is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.18 in Biome Grow on September 2, 2024 and sell it today you would lose (0.80) from holding Biome Grow or give up 67.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
cbdMD Inc vs. Biome Grow
Performance |
| Timeline |
| cbdMD Inc |
| Biome Grow |
CbdMD and Biome Grow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CbdMD and Biome Grow
The main advantage of trading using opposite CbdMD and Biome Grow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CbdMD position performs unexpectedly, Biome Grow 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 Biome Grow will offset losses from the drop in Biome Grow's long position.| CbdMD vs. CV Sciences | CbdMD vs. Trulieve Cannabis Corp | CbdMD vs. Curaleaf Holdings | CbdMD vs. Green Thumb Industries |
| Biome Grow vs. Hypera SA | Biome Grow vs. YourWay Cannabis Brands | Biome Grow vs. Cumberland Pharmaceuticals | Biome Grow vs. Genomma Lab Internacional |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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