Correlation Between Cann American and Body

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

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

Diversification Opportunities for Cann American and Body

0.62

Correlation Coefficient

Cann American  Body

Poor diversification

The 3 months correlation between Cann and Body is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Body And Mind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Body And Mind and Cann American 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 Cann American Corp are associated (or correlated) with Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Body And Mind has no effect on the direction of Cann American i.e., Cann American and Body go up and down completely randomly.

Pair Corralation between Cann American and Body

Given the investment horizon of 90 days Cann American Corp is expected to generate 0.73 times more return on investment than Body. However, Cann American Corp is 1.38 times less risky than Body. It trades about 0.09 of its potential returns per unit of risk. Body And Mind is currently generating about 0.04 per unit of risk. If you would invest  0.29  in Cann American Corp on December 26, 2024 and sell it today you would earn a total of  0.09  from holding Cann American Corp or generate 31.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.56%
Values	Daily Returns

Cann American Corp  vs.  Body And Mind

Cann American Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cann American Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Cann American sustained solid returns over the last few months and may actually be approaching a breakup point.

Body And Mind

Risk-Adjusted Performance

Insignificant

Over the last 90 days Body And Mind has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively fragile primary indicators, Body revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cann American and Body

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

The idea behind Cann American Corp and Body And Mind 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 Commodity Directory module to find actively traded commodities issued by global exchanges.