Correlation Between Prestige Brand and Speakeasy Cannabis

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

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

Diversification Opportunities for Prestige Brand and Speakeasy Cannabis

0.0

Correlation Coefficient

Prestige Brand  Speakeasy Cannabis

Pay attention - limited upside

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

Pair Corralation between Prestige Brand and Speakeasy Cannabis

If you would invest  8,499  in Prestige Brand Holdings on December 1, 2024 and sell it today you would lose (24.00) from holding Prestige Brand Holdings or give up 0.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Prestige Brand Holdings  vs.  Speakeasy Cannabis Club

Prestige Brand Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prestige Brand Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Prestige Brand is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Speakeasy Cannabis Club

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Prestige Brand and Speakeasy Cannabis

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

The idea behind Prestige Brand Holdings and Speakeasy Cannabis Club 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.