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

0.28

Correlation Coefficient

Cann American  Centr Brands Corp

Modest diversification

The 3 months correlation between Cann and Centr is 0.28. 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 under-perform the Centr Brands Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cann American Corp is 1.17 times less risky than Centr Brands Corp. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Centr Brands Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Centr Brands Corp on September 7, 2024 and sell it today you would lose (5.62) from holding Centr Brands Corp or give up 51.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Cann American Corp  vs.  Centr Brands Corp

Cann American Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cann American Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Centr Brands Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centr Brands Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Centr Brands Corp reported solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Cann American Corp and Centr Brands Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.