Correlation Between BC Bud and Im Cannabis

Can any of the company-specific risk be diversified away by investing in both BC Bud 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 BC Bud and Im Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The BC Bud and Im Cannabis Corp, you can compare the effects of market volatilities on BC Bud 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 BC Bud with a short position of Im Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of BC Bud and Im Cannabis.

Diversification Opportunities for BC Bud and Im Cannabis

0.69

Correlation Coefficient

BC Bud  Im Cannabis

Poor diversification

The 3 months correlation between BCBCF and IMCC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The BC Bud 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 BC Bud 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 The BC Bud 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 BC Bud i.e., BC Bud and Im Cannabis go up and down completely randomly.

Pair Corralation between BC Bud and Im Cannabis

Assuming the 90 days horizon The BC Bud is expected to generate 3.04 times more return on investment than Im Cannabis. However, BC Bud is 3.04 times more volatile than Im Cannabis Corp. It trades about -0.01 of its potential returns per unit of risk. Im Cannabis Corp is currently generating about -0.11 per unit of risk. If you would invest  6.50  in The BC Bud on December 27, 2024 and sell it today you would lose (2.55) from holding The BC Bud or give up 39.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

The BC Bud  vs.  Im Cannabis Corp

BC Bud

Risk-Adjusted Performance

Very Weak

Over the last 90 days The BC Bud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, BC Bud is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Im Cannabis Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Im Cannabis Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BC Bud and Im Cannabis

The main advantage of trading using opposite BC Bud and Im Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC Bud 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 The BC Bud 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.