Correlation Between Now Corp and Greater Cannabis

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

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

Diversification Opportunities for Now Corp and Greater Cannabis

0.23

Correlation Coefficient

Now Corp  Greater Cannabis

Modest diversification

The 3 months correlation between Now and Greater is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Now Corp and Greater Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greater Cannabis and Now Corp 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 Now Corp are associated (or correlated) with Greater Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greater Cannabis has no effect on the direction of Now Corp i.e., Now Corp and Greater Cannabis go up and down completely randomly.

Pair Corralation between Now Corp and Greater Cannabis

Given the investment horizon of 90 days Now Corp is expected to generate 7.68 times more return on investment than Greater Cannabis. However, Now Corp is 7.68 times more volatile than Greater Cannabis. It trades about 0.15 of its potential returns per unit of risk. Greater Cannabis is currently generating about 0.11 per unit of risk. If you would invest  0.01  in Now Corp on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Now Corp or generate 0.0% return on investment over 90 days.

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

Now Corp  vs.  Greater Cannabis

Now Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Now Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Now Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Greater Cannabis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greater Cannabis are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Greater Cannabis displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Now Corp and Greater Cannabis

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

The idea behind Now Corp and Greater Cannabis 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.