Correlation Between Cann American and Millennium Investment

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

Diversification Opportunities for Cann American and Millennium Investment

-0.14

Correlation Coefficient

Cann American  Millennium Investment

Good diversification

The 3 months correlation between Cann and Millennium is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Millennium Investment Acquisit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Investment 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 Millennium Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Investment has no effect on the direction of Cann American i.e., Cann American and Millennium Investment go up and down completely randomly.

Pair Corralation between Cann American and Millennium Investment

Given the investment horizon of 90 days Cann American is expected to generate 15.0 times less return on investment than Millennium Investment. But when comparing it to its historical volatility, Cann American Corp is 3.05 times less risky than Millennium Investment. It trades about 0.03 of its potential returns per unit of risk. Millennium Investment Acquisition is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Millennium Investment Acquisition on September 5, 2024 and sell it today you would earn a total of  0.01  from holding Millennium Investment Acquisition or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Cann American Corp  vs.  Millennium Investment Acquisit

Cann American Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cann American Corp are ranked lower than 2 (%) 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.

Millennium Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Millennium Investment Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Millennium Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cann American and Millennium Investment

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

The idea behind Cann American Corp and Millennium Investment Acquisition 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.