Correlation Between Heritage Cannabis and 1933 Industries

Can any of the company-specific risk be diversified away by investing in both Heritage Cannabis and 1933 Industries 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 Heritage Cannabis and 1933 Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heritage Cannabis Holdings and 1933 Industries, you can compare the effects of market volatilities on Heritage Cannabis and 1933 Industries 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 Heritage Cannabis with a short position of 1933 Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Cannabis and 1933 Industries.

Diversification Opportunities for Heritage Cannabis and 1933 Industries

0.0

Correlation Coefficient

Heritage Cannabis  1933 Industries

Pay attention - limited upside

The 3 months correlation between Heritage and 1933 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Cannabis Holdings and 1933 Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1933 Industries and Heritage Cannabis 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 Heritage Cannabis Holdings are associated (or correlated) with 1933 Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1933 Industries has no effect on the direction of Heritage Cannabis i.e., Heritage Cannabis and 1933 Industries go up and down completely randomly.

Pair Corralation between Heritage Cannabis and 1933 Industries

Assuming the 90 days horizon Heritage Cannabis Holdings is expected to generate 1.53 times more return on investment than 1933 Industries. However, Heritage Cannabis is 1.53 times more volatile than 1933 Industries. It trades about 0.07 of its potential returns per unit of risk. 1933 Industries is currently generating about 0.06 per unit of risk. If you would invest  0.91  in Heritage Cannabis Holdings on October 8, 2024 and sell it today you would lose (0.77) from holding Heritage Cannabis Holdings or give up 84.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	69.2%
Values	Daily Returns

Heritage Cannabis Holdings  vs.  1933 Industries

Heritage Cannabis

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Heritage Cannabis Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Heritage Cannabis is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

1933 Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1933 Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, 1933 Industries is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heritage Cannabis and 1933 Industries

The main advantage of trading using opposite Heritage Cannabis and 1933 Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Cannabis position performs unexpectedly, 1933 Industries 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 1933 Industries will offset losses from the drop in 1933 Industries' long position.

The idea behind Heritage Cannabis Holdings and 1933 Industries 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.