Correlation Between CbdMD and Veritas Farms
Can any of the company-specific risk be diversified away by investing in both CbdMD and Veritas Farms 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 Veritas Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cbdMD Inc and Veritas Farms, you can compare the effects of market volatilities on CbdMD and Veritas Farms 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 Veritas Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of CbdMD and Veritas Farms.
Diversification Opportunities for CbdMD and Veritas Farms
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between CbdMD and Veritas is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and Veritas Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veritas Farms 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 Veritas Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veritas Farms has no effect on the direction of CbdMD i.e., CbdMD and Veritas Farms go up and down completely randomly.
Pair Corralation between CbdMD and Veritas Farms
Given the investment horizon of 90 days cbdMD Inc is expected to under-perform the Veritas Farms. But the stock apears to be less risky and, when comparing its historical volatility, cbdMD Inc is 21.75 times less risky than Veritas Farms. The stock trades about -0.07 of its potential returns per unit of risk. The Veritas Farms is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.80 in Veritas Farms on September 3, 2024 and sell it today you would lose (1.75) from holding Veritas Farms or give up 97.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
cbdMD Inc vs. Veritas Farms
Performance |
| Timeline |
| cbdMD Inc |
| Veritas Farms |
CbdMD and Veritas Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CbdMD and Veritas Farms
The main advantage of trading using opposite CbdMD and Veritas Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CbdMD position performs unexpectedly, Veritas Farms 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 Veritas Farms will offset losses from the drop in Veritas Farms' long position.| CbdMD vs. CV Sciences | CbdMD vs. Trulieve Cannabis Corp | CbdMD vs. Curaleaf Holdings | CbdMD vs. Green Thumb Industries |
| Veritas Farms vs. Decibel Cannabis | Veritas Farms vs. Delta 9 Cannabis | Veritas Farms vs. Body and Mind | Veritas Farms vs. CLS Holdings USA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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