Correlation Between CBD Global and Cbd Life

Can any of the company-specific risk be diversified away by investing in both CBD Global and Cbd Life 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 CBD Global and Cbd Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CBD Global Sciences and Cbd Life Sciences, you can compare the effects of market volatilities on CBD Global and Cbd Life 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 CBD Global with a short position of Cbd Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBD Global and Cbd Life.

Diversification Opportunities for CBD Global and Cbd Life

0.22

Correlation Coefficient

CBD Global  Cbd Life

Modest diversification

The 3 months correlation between CBD and Cbd is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CBD Global Sciences and Cbd Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cbd Life Sciences and CBD Global 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 CBD Global Sciences are associated (or correlated) with Cbd Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cbd Life Sciences has no effect on the direction of CBD Global i.e., CBD Global and Cbd Life go up and down completely randomly.

Pair Corralation between CBD Global and Cbd Life

If you would invest  0.05  in Cbd Life Sciences on October 7, 2024 and sell it today you would lose (0.01) from holding Cbd Life Sciences or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

CBD Global Sciences  vs.  Cbd Life Sciences

CBD Global Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cbd Life Sciences

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cbd Life Sciences are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Cbd Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBD Global and Cbd Life

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

The idea behind CBD Global Sciences and Cbd Life Sciences 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .