Correlation Between Elixinol Global and BC Bud

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

By analyzing existing cross correlation between Elixinol Global and The BC Bud, you can compare the effects of market volatilities on Elixinol Global and BC Bud 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 Elixinol Global with a short position of BC Bud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elixinol Global and BC Bud.

Diversification Opportunities for Elixinol Global and BC Bud

0.12

Correlation Coefficient

Elixinol Global  BC Bud

Average diversification

The 3 months correlation between Elixinol and BCBCF is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Elixinol Global and The BC Bud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Bud and Elixinol Global 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 Elixinol Global are associated (or correlated) with BC Bud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Bud has no effect on the direction of Elixinol Global i.e., Elixinol Global and BC Bud go up and down completely randomly.

Pair Corralation between Elixinol Global and BC Bud

Assuming the 90 days horizon Elixinol Global is expected to generate 7.07 times more return on investment than BC Bud. However, Elixinol Global is 7.07 times more volatile than The BC Bud. It trades about 0.14 of its potential returns per unit of risk. The BC Bud is currently generating about 0.01 per unit of risk. If you would invest  2.56  in Elixinol Global on December 2, 2024 and sell it today you would lose (0.56) from holding Elixinol Global or give up 21.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Elixinol Global  vs.  The BC Bud

Elixinol Global

Risk-Adjusted Performance

Good

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

BC Bud

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The BC Bud are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, BC Bud may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Elixinol Global and BC Bud

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

The idea behind Elixinol Global and The BC Bud 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.