Correlation Between Benchmark Botanics and Halo Collective

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

By analyzing existing cross correlation between Benchmark Botanics and Halo Collective, you can compare the effects of market volatilities on Benchmark Botanics and Halo Collective 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 Halo Collective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Botanics and Halo Collective.

Diversification Opportunities for Benchmark Botanics and Halo Collective

0.0

Correlation Coefficient

Benchmark Botanics  Halo Collective

Pay attention - limited upside

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

Pair Corralation between Benchmark Botanics and Halo Collective

Assuming the 90 days horizon Benchmark Botanics is expected to generate 5.38 times less return on investment than Halo Collective. But when comparing it to its historical volatility, Benchmark Botanics is 2.43 times less risky than Halo Collective. It trades about 0.03 of its potential returns per unit of risk. Halo Collective is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.31  in Halo Collective on December 2, 2024 and sell it today you would lose (2.30) from holding Halo Collective or give up 99.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Benchmark Botanics  vs.  Halo Collective

Benchmark Botanics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Botanics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Halo Collective

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Benchmark Botanics and Halo Collective

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

The idea behind Benchmark Botanics and Halo Collective 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.