Correlation Between TransGlobal Assets and Cann American

Can any of the company-specific risk be diversified away by investing in both TransGlobal Assets and Cann American 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 TransGlobal Assets and Cann American into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for TransGlobal Assets and Cann American

-0.2

Correlation Coefficient

TransGlobal Assets  Cann American

Good diversification

The 3 months correlation between TransGlobal and Cann is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding TransGlobal Assets and Cann American Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cann American Corp and TransGlobal Assets 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 TransGlobal Assets are associated (or correlated) with Cann American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cann American Corp has no effect on the direction of TransGlobal Assets i.e., TransGlobal Assets and Cann American go up and down completely randomly.

Pair Corralation between TransGlobal Assets and Cann American

Given the investment horizon of 90 days TransGlobal Assets is expected to generate 1.33 times less return on investment than Cann American. But when comparing it to its historical volatility, TransGlobal Assets is 1.13 times less risky than Cann American. It trades about 0.08 of its potential returns per unit of risk. Cann American Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.32  in Cann American Corp on December 2, 2024 and sell it today you would earn a total of  0.06  from holding Cann American Corp or generate 18.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TransGlobal Assets  vs.  Cann American Corp

TransGlobal Assets

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TransGlobal Assets are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, TransGlobal Assets demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cann American Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cann American Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Cann American sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TransGlobal Assets and Cann American

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

The idea behind TransGlobal Assets and Cann American Corp 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.