Correlation Between Chalice Brands and RIV Capital

Can any of the company-specific risk be diversified away by investing in both Chalice Brands and RIV Capital 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 Chalice Brands and RIV Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Chalice Brands and RIV Capital

0.66

Correlation Coefficient

Chalice Brands  RIV Capital

Poor diversification

The 3 months correlation between Chalice and RIV is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Brands and RIV Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIV Capital and Chalice Brands 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 Chalice Brands are associated (or correlated) with RIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIV Capital has no effect on the direction of Chalice Brands i.e., Chalice Brands and RIV Capital go up and down completely randomly.

Pair Corralation between Chalice Brands and RIV Capital

Assuming the 90 days horizon Chalice Brands is expected to under-perform the RIV Capital. In addition to that, Chalice Brands is 1.76 times more volatile than RIV Capital. It trades about -0.17 of its total potential returns per unit of risk. RIV Capital is currently generating about -0.03 per unit of volatility. If you would invest  13.00  in RIV Capital on September 16, 2024 and sell it today you would lose (4.20) from holding RIV Capital or give up 32.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Chalice Brands  vs.  RIV Capital

Chalice Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Brands 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 essential 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.

RIV Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RIV Capital 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 basic 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.

Pair Trading with Chalice Brands and RIV Capital

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

The idea behind Chalice Brands and RIV Capital 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.