Correlation Between Grand Havana and Better Choice

Can any of the company-specific risk be diversified away by investing in both Grand Havana and Better Choice 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 Grand Havana and Better Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grand Havana and Better Choice, you can compare the effects of market volatilities on Grand Havana and Better Choice 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 Grand Havana with a short position of Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Havana and Better Choice.

Diversification Opportunities for Grand Havana and Better Choice

0.42

Correlation Coefficient

Grand Havana  Better Choice

Very weak diversification

The 3 months correlation between Grand and Better is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Grand Havana and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice and Grand Havana 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 Grand Havana are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Grand Havana i.e., Grand Havana and Better Choice go up and down completely randomly.

Pair Corralation between Grand Havana and Better Choice

Given the investment horizon of 90 days Grand Havana is expected to under-perform the Better Choice. In addition to that, Grand Havana is 1.45 times more volatile than Better Choice. It trades about -0.03 of its total potential returns per unit of risk. Better Choice is currently generating about -0.02 per unit of volatility. If you would invest  254.00  in Better Choice on September 3, 2024 and sell it today you would lose (56.00) from holding Better Choice or give up 22.05% of portfolio value over 90 days.

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

Grand Havana  vs.  Better Choice

Grand Havana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Havana has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Better Choice

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Better Choice has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Grand Havana and Better Choice

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

The idea behind Grand Havana and Better Choice 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.