Correlation Between CbdMD and Stemsation International
Can any of the company-specific risk be diversified away by investing in both CbdMD and Stemsation International 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 Stemsation International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cbdMD Inc and Stemsation International, you can compare the effects of market volatilities on CbdMD and Stemsation International 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 Stemsation International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CbdMD and Stemsation International.
Diversification Opportunities for CbdMD and Stemsation International
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CbdMD and Stemsation is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and Stemsation International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stemsation International 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 Stemsation International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stemsation International has no effect on the direction of CbdMD i.e., CbdMD and Stemsation International go up and down completely randomly.
Pair Corralation between CbdMD and Stemsation International
Given the investment horizon of 90 days cbdMD Inc is expected to under-perform the Stemsation International. But the stock apears to be less risky and, when comparing its historical volatility, cbdMD Inc is 5.15 times less risky than Stemsation International. The stock trades about -0.28 of its potential returns per unit of risk. The Stemsation International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.62 in Stemsation International on December 1, 2024 and sell it today you would lose (0.03) from holding Stemsation International or give up 4.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
cbdMD Inc vs. Stemsation International
Performance |
| Timeline |
| cbdMD Inc |
| Stemsation International |
CbdMD and Stemsation International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CbdMD and Stemsation International
The main advantage of trading using opposite CbdMD and Stemsation International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CbdMD position performs unexpectedly, Stemsation International 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 Stemsation International will offset losses from the drop in Stemsation International's long position.| CbdMD vs. CV Sciences | CbdMD vs. Trulieve Cannabis Corp | CbdMD vs. Curaleaf Holdings | CbdMD vs. Green Thumb Industries |
| Stemsation International vs. Green Cures Botanical | Stemsation International vs. Cann American Corp | Stemsation International vs. Rimrock Gold Corp | Stemsation International vs. Galexxy Holdings |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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