Correlation Between Clever Leaves and BC Bud

Can any of the company-specific risk be diversified away by investing in both Clever Leaves and BC Bud 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 Clever Leaves and BC Bud into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Clever Leaves and BC Bud

-0.01

Correlation Coefficient

Clever Leaves  BC Bud

Good diversification

The 3 months correlation between Clever and BCBCF is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Clever Leaves Holdings and The BC Bud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Bud and Clever Leaves 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 Clever Leaves Holdings are associated (or correlated) with BC Bud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Bud has no effect on the direction of Clever Leaves i.e., Clever Leaves and BC Bud go up and down completely randomly.

Pair Corralation between Clever Leaves and BC Bud

Given the investment horizon of 90 days Clever Leaves Holdings is expected to generate 25.09 times more return on investment than BC Bud. However, Clever Leaves is 25.09 times more volatile than The BC Bud. It trades about 0.31 of its potential returns per unit of risk. The BC Bud is currently generating about 0.04 per unit of risk. If you would invest  0.02  in Clever Leaves Holdings on December 3, 2024 and sell it today you would earn a total of  0.10  from holding Clever Leaves Holdings or generate 500.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Clever Leaves Holdings  vs.  The BC Bud

Clever Leaves Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clever Leaves Holdings are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Clever Leaves reported solid returns over the last few months and may actually be approaching a breakup point.

BC Bud

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The BC Bud are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, BC Bud reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clever Leaves and BC Bud

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

The idea behind Clever Leaves Holdings and The BC Bud 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.