Correlation Between Silver Spike and Cannabis Strategic

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

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

Diversification Opportunities for Silver Spike and Cannabis Strategic

0.14

Correlation Coefficient

Silver Spike  Cannabis Strategic

Average diversification

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

Pair Corralation between Silver Spike and Cannabis Strategic

Given the investment horizon of 90 days Silver Spike is expected to generate 389.43 times less return on investment than Cannabis Strategic. But when comparing it to its historical volatility, Silver Spike Investment is 187.03 times less risky than Cannabis Strategic. It trades about 0.14 of its potential returns per unit of risk. Cannabis Strategic Ventures is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Cannabis Strategic Ventures on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Cannabis Strategic Ventures or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.3%
Values	Daily Returns

Silver Spike Investment  vs.  Cannabis Strategic Ventures

Silver Spike Investment

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cannabis Strategic

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cannabis Strategic Ventures are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Cannabis Strategic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Spike and Cannabis Strategic

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

The idea behind Silver Spike Investment and Cannabis Strategic Ventures 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.