Correlation Between All American and Canna Consumer

Can any of the company-specific risk be diversified away by investing in both All American and Canna Consumer 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 All American and Canna Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between All American Pet and Canna Consumer Goods, you can compare the effects of market volatilities on All American and Canna Consumer 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 All American with a short position of Canna Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and Canna Consumer.

Diversification Opportunities for All American and Canna Consumer

0.69

Correlation Coefficient

All American  Canna Consumer

Poor diversification

The 3 months correlation between All and Canna is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding All American Pet and Canna Consumer Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canna Consumer Goods and All American 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 All American Pet are associated (or correlated) with Canna Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canna Consumer Goods has no effect on the direction of All American i.e., All American and Canna Consumer go up and down completely randomly.

Pair Corralation between All American and Canna Consumer

Given the investment horizon of 90 days All American Pet is expected to under-perform the Canna Consumer. In addition to that, All American is 1.53 times more volatile than Canna Consumer Goods. It trades about -0.24 of its total potential returns per unit of risk. Canna Consumer Goods is currently generating about -0.13 per unit of volatility. If you would invest  13.00  in Canna Consumer Goods on October 24, 2024 and sell it today you would lose (5.89) from holding Canna Consumer Goods or give up 45.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

All American Pet  vs.  Canna Consumer Goods

All American Pet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All American Pet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Canna Consumer Goods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canna Consumer Goods has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in February 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with All American and Canna Consumer

The main advantage of trading using opposite All American and Canna Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All American position performs unexpectedly, Canna Consumer 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 Canna Consumer will offset losses from the drop in Canna Consumer's long position.

The idea behind All American Pet and Canna Consumer Goods 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.