Correlation Between US Financial and OrganiGram Holdings

Can any of the company-specific risk be diversified away by investing in both US Financial and OrganiGram Holdings 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 US Financial and OrganiGram Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US Financial 15 and OrganiGram Holdings, you can compare the effects of market volatilities on US Financial and OrganiGram Holdings 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 US Financial with a short position of OrganiGram Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and OrganiGram Holdings.

Diversification Opportunities for US Financial and OrganiGram Holdings

-0.55

Correlation Coefficient

US Financial  OrganiGram Holdings

Excellent diversification

The 3 months correlation between FTU-PB and OrganiGram is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and OrganiGram Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrganiGram Holdings and US Financial 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 US Financial 15 are associated (or correlated) with OrganiGram Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrganiGram Holdings has no effect on the direction of US Financial i.e., US Financial and OrganiGram Holdings go up and down completely randomly.

Pair Corralation between US Financial and OrganiGram Holdings

Assuming the 90 days trading horizon US Financial 15 is expected to generate 0.6 times more return on investment than OrganiGram Holdings. However, US Financial 15 is 1.68 times less risky than OrganiGram Holdings. It trades about 0.08 of its potential returns per unit of risk. OrganiGram Holdings is currently generating about 0.02 per unit of risk. If you would invest  680.00  in US Financial 15 on October 11, 2024 and sell it today you would earn a total of  57.00  from holding US Financial 15 or generate 8.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

US Financial 15  vs.  OrganiGram Holdings

US Financial 15

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US Financial 15 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, US Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

OrganiGram Holdings

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OrganiGram Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, OrganiGram Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with US Financial and OrganiGram Holdings

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

The idea behind US Financial 15 and OrganiGram Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.