Correlation Between Biome Grow and Acreage Holdings

Can any of the company-specific risk be diversified away by investing in both Biome Grow and Acreage Holdings 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 Biome Grow and Acreage Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Biome Grow and Acreage Holdings, you can compare the effects of market volatilities on Biome Grow and Acreage Holdings 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 Biome Grow with a short position of Acreage Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biome Grow and Acreage Holdings.

Diversification Opportunities for Biome Grow and Acreage Holdings

0.14

Correlation Coefficient

Biome Grow  Acreage Holdings

Average diversification

The 3 months correlation between Biome and Acreage is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Biome Grow and Acreage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acreage Holdings and Biome Grow 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 Biome Grow are associated (or correlated) with Acreage Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acreage Holdings has no effect on the direction of Biome Grow i.e., Biome Grow and Acreage Holdings go up and down completely randomly.

Pair Corralation between Biome Grow and Acreage Holdings

Assuming the 90 days horizon Biome Grow is expected to generate 2.62 times more return on investment than Acreage Holdings. However, Biome Grow is 2.62 times more volatile than Acreage Holdings. It trades about 0.13 of its potential returns per unit of risk. Acreage Holdings is currently generating about 0.01 per unit of risk. If you would invest  0.37  in Biome Grow on September 29, 2024 and sell it today you would earn a total of  0.37  from holding Biome Grow or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.69%
Values	Daily Returns

Biome Grow  vs.  Acreage Holdings

Biome Grow

Risk-Adjusted Performance

10 of 100

OK

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

Acreage Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acreage Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Acreage Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Biome Grow and Acreage Holdings

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

The idea behind Biome Grow and Acreage Holdings 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 Stocks Directory module to find actively traded stocks across global markets.