Correlation Between Cann American and Integrated Cannabis

Can any of the company-specific risk be diversified away by investing in both Cann American and Integrated Cannabis 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 Integrated Cannabis 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 Integrated Cannabis Solutions, you can compare the effects of market volatilities on Cann American and Integrated Cannabis 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 Integrated Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cann American and Integrated Cannabis.

Diversification Opportunities for Cann American and Integrated Cannabis

0.58

Correlation Coefficient

Cann American  Integrated Cannabis

Very weak diversification

The 3 months correlation between Cann and Integrated is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Integrated Cannabis Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Cannabis 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 Integrated Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Cannabis has no effect on the direction of Cann American i.e., Cann American and Integrated Cannabis go up and down completely randomly.

Pair Corralation between Cann American and Integrated Cannabis

Given the investment horizon of 90 days Cann American Corp is expected to generate 2.46 times more return on investment than Integrated Cannabis. However, Cann American is 2.46 times more volatile than Integrated Cannabis Solutions. It trades about 0.06 of its potential returns per unit of risk. Integrated Cannabis Solutions is currently generating about 0.14 per unit of risk. If you would invest  0.39  in Cann American Corp on December 29, 2024 and sell it today you would lose (0.01) from holding Cann American Corp or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Cann American Corp  vs.  Integrated Cannabis Solutions

Cann American Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cann American Corp are ranked lower than 5 (%) 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.

Integrated Cannabis

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Integrated Cannabis Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Integrated Cannabis disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cann American and Integrated Cannabis

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

The idea behind Cann American Corp and Integrated Cannabis Solutions 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 Global Correlations module to find global opportunities by holding instruments from different markets.