Correlation Between Benchmark Botanics and Centr Brands Corp

Can any of the company-specific risk be diversified away by investing in both Benchmark Botanics and Centr Brands Corp 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 Benchmark Botanics and Centr Brands Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Benchmark Botanics and Centr Brands Corp, you can compare the effects of market volatilities on Benchmark Botanics and Centr Brands Corp 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 Benchmark Botanics with a short position of Centr Brands Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Botanics and Centr Brands Corp.

Diversification Opportunities for Benchmark Botanics and Centr Brands Corp

0.0

Correlation Coefficient

Benchmark Botanics  Centr Brands Corp

Pay attention - limited upside

The 3 months correlation between Benchmark and Centr is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Botanics and Centr Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centr Brands Corp and Benchmark Botanics 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 Benchmark Botanics are associated (or correlated) with Centr Brands Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centr Brands Corp has no effect on the direction of Benchmark Botanics i.e., Benchmark Botanics and Centr Brands Corp go up and down completely randomly.

Pair Corralation between Benchmark Botanics and Centr Brands Corp

If you would invest  3.60  in Centr Brands Corp on September 7, 2024 and sell it today you would earn a total of  1.78  from holding Centr Brands Corp or generate 49.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Benchmark Botanics  vs.  Centr Brands Corp

Benchmark Botanics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Centr Brands Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centr Brands Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Centr Brands Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Benchmark Botanics and Centr Brands Corp

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

The idea behind Benchmark Botanics and Centr Brands 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.