Correlation Between Cann American and Centr Brands Corp
Can any of the company-specific risk be diversified away by investing in both Cann American and Centr Brands Corp 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 Centr Brands Corp 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 Centr Brands Corp, you can compare the effects of market volatilities on Cann American and Centr Brands Corp 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 Centr Brands Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cann American and Centr Brands Corp.
Diversification Opportunities for Cann American and Centr Brands Corp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cann and Centr is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Centr Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centr Brands Corp 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 Centr Brands Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centr Brands Corp has no effect on the direction of Cann American i.e., Cann American and Centr Brands Corp go up and down completely randomly.
Pair Corralation between Cann American and Centr Brands Corp
Given the investment horizon of 90 days Cann American Corp is expected to generate 0.66 times more return on investment than Centr Brands Corp. However, Cann American Corp is 1.51 times less risky than Centr Brands Corp. It trades about 0.09 of its potential returns per unit of risk. Centr Brands Corp is currently generating about 0.05 per unit of risk. If you would invest 0.26 in Cann American Corp on September 6, 2024 and sell it today you would earn a total of 0.04 from holding Cann American Corp or generate 15.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.75% |
Values | Daily Returns |
Cann American Corp vs. Centr Brands Corp
Performance |
Timeline |
Cann American Corp |
Centr Brands Corp |
Cann American and Centr Brands Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cann American and Centr Brands Corp
The main advantage of trading using opposite Cann American and Centr Brands Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cann American position performs unexpectedly, Centr Brands Corp 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 Centr Brands Corp will offset losses from the drop in Centr Brands Corp's long position.Cann American vs. Speakeasy Cannabis Club | Cann American vs. Benchmark Botanics | Cann American vs. Link Reservations |
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Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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