Correlation Between Grand Havana and Yuenglings Ice

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

By analyzing existing cross correlation between Grand Havana and Yuenglings Ice Cream, you can compare the effects of market volatilities on Grand Havana and Yuenglings Ice 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 Yuenglings Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Havana and Yuenglings Ice.

Diversification Opportunities for Grand Havana and Yuenglings Ice

-0.04

Correlation Coefficient

Grand Havana  Yuenglings Ice

Good diversification

The 3 months correlation between Grand and Yuenglings is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Grand Havana and Yuenglings Ice Cream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuenglings Ice Cream 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 Yuenglings Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuenglings Ice Cream has no effect on the direction of Grand Havana i.e., Grand Havana and Yuenglings Ice go up and down completely randomly.

Pair Corralation between Grand Havana and Yuenglings Ice

Given the investment horizon of 90 days Grand Havana is expected to generate 18.64 times less return on investment than Yuenglings Ice. But when comparing it to its historical volatility, Grand Havana is 2.68 times less risky than Yuenglings Ice. It trades about 0.01 of its potential returns per unit of risk. Yuenglings Ice Cream is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.23  in Yuenglings Ice Cream on September 4, 2024 and sell it today you would lose (0.07) from holding Yuenglings Ice Cream or give up 30.43% of portfolio value over 90 days.

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

Grand Havana  vs.  Yuenglings Ice Cream

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 fairly conflicting basic indicators, Grand Havana may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yuenglings Ice Cream

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yuenglings Ice Cream are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Yuenglings Ice displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grand Havana and Yuenglings Ice

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

The idea behind Grand Havana and Yuenglings Ice Cream 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.