Correlation Between Cann American and Captiva Verde
Can any of the company-specific risk be diversified away by investing in both Cann American and Captiva Verde 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 Cann American and Captiva Verde into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cann American Corp and Captiva Verde Land, you can compare the effects of market volatilities on Cann American and Captiva Verde 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 Cann American with a short position of Captiva Verde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cann American and Captiva Verde.
Diversification Opportunities for Cann American and Captiva Verde
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cann and Captiva is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Captiva Verde Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Captiva Verde Land and Cann American 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 Cann American Corp are associated (or correlated) with Captiva Verde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Captiva Verde Land has no effect on the direction of Cann American i.e., Cann American and Captiva Verde go up and down completely randomly.
Pair Corralation between Cann American and Captiva Verde
Given the investment horizon of 90 days Cann American Corp is expected to under-perform the Captiva Verde. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cann American Corp is 3.76 times less risky than Captiva Verde. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Captiva Verde Land is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Captiva Verde Land on September 6, 2024 and sell it today you would lose (1.00) from holding Captiva Verde Land or give up 66.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cann American Corp vs. Captiva Verde Land
Performance |
Timeline |
Cann American Corp |
Captiva Verde Land |
Cann American and Captiva Verde Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cann American and Captiva Verde
The main advantage of trading using opposite Cann American and Captiva Verde positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cann American position performs unexpectedly, Captiva Verde 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 Captiva Verde will offset losses from the drop in Captiva Verde's long position.Cann American vs. Speakeasy Cannabis Club | Cann American vs. Benchmark Botanics | Cann American vs. Link Reservations |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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