Correlation Between Rubicon Organics and Decibel Cannabis

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

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

Diversification Opportunities for Rubicon Organics and Decibel Cannabis

0.01

Correlation Coefficient

Rubicon Organics  Decibel Cannabis

Significant diversification

The 3 months correlation between Rubicon and Decibel is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Decibel Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decibel Cannabis and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with Decibel Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decibel Cannabis has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and Decibel Cannabis go up and down completely randomly.

Pair Corralation between Rubicon Organics and Decibel Cannabis

Assuming the 90 days horizon Rubicon Organics is expected to generate 0.93 times more return on investment than Decibel Cannabis. However, Rubicon Organics is 1.07 times less risky than Decibel Cannabis. It trades about 0.01 of its potential returns per unit of risk. Decibel Cannabis is currently generating about -0.01 per unit of risk. If you would invest  35.00  in Rubicon Organics on September 12, 2024 and sell it today you would lose (8.00) from holding Rubicon Organics or give up 22.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Rubicon Organics  vs.  Decibel Cannabis

Rubicon Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Organics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Decibel Cannabis

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Decibel Cannabis are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Decibel Cannabis reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rubicon Organics and Decibel Cannabis

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

The idea behind Rubicon Organics and Decibel 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.