Correlation Between Healthcare Triangle and Cannabis Sativa

Can any of the company-specific risk be diversified away by investing in both Healthcare Triangle and Cannabis Sativa 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 Healthcare Triangle and Cannabis Sativa into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Healthcare Triangle and Cannabis Sativa

-0.14

Correlation Coefficient

Healthcare Triangle  Cannabis Sativa

Good diversification

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

Pair Corralation between Healthcare Triangle and Cannabis Sativa

Given the investment horizon of 90 days Healthcare Triangle is expected to generate 0.8 times more return on investment than Cannabis Sativa. However, Healthcare Triangle is 1.26 times less risky than Cannabis Sativa. It trades about 0.13 of its potential returns per unit of risk. Cannabis Sativa is currently generating about -0.02 per unit of risk. If you would invest  88.00  in Healthcare Triangle on October 11, 2024 and sell it today you would earn a total of  20.00  from holding Healthcare Triangle or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Healthcare Triangle  vs.  Cannabis Sativa

Healthcare Triangle

Risk-Adjusted Performance

11 of 100

Good

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

Cannabis Sativa

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cannabis Sativa are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Cannabis Sativa unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Triangle and Cannabis Sativa

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

The idea behind Healthcare Triangle and Cannabis Sativa 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.