Correlation Between BayCurrent Consulting and American Cannabis

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

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

Diversification Opportunities for BayCurrent Consulting and American Cannabis

0.72

Correlation Coefficient

BayCurrent Consulting  American Cannabis

Poor diversification

The 3 months correlation between BayCurrent and American is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BayCurrent Consulting and American Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Cannabis and BayCurrent Consulting 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 BayCurrent Consulting are associated (or correlated) with American Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Cannabis has no effect on the direction of BayCurrent Consulting i.e., BayCurrent Consulting and American Cannabis go up and down completely randomly.

Pair Corralation between BayCurrent Consulting and American Cannabis

If you would invest  0.50  in American Cannabis on September 12, 2024 and sell it today you would lose (0.48) from holding American Cannabis or give up 96.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

BayCurrent Consulting  vs.  American Cannabis

BayCurrent Consulting

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Cannabis

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Cannabis are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, American Cannabis revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BayCurrent Consulting and American Cannabis

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

The idea behind BayCurrent Consulting and American Cannabis 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.