Correlation Between Journey Medical and Weed

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

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

Diversification Opportunities for Journey Medical and Weed

0.31

Correlation Coefficient

Journey Medical  Weed

Weak diversification

The 3 months correlation between Journey and Weed is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Journey Medical Corp and Weed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weed Inc and Journey Medical 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 Journey Medical Corp are associated (or correlated) with Weed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weed Inc has no effect on the direction of Journey Medical i.e., Journey Medical and Weed go up and down completely randomly.

Pair Corralation between Journey Medical and Weed

Given the investment horizon of 90 days Journey Medical Corp is expected to under-perform the Weed. But the stock apears to be less risky and, when comparing its historical volatility, Journey Medical Corp is 3.08 times less risky than Weed. The stock trades about -0.01 of its potential returns per unit of risk. The Weed Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Weed Inc on September 20, 2024 and sell it today you would lose (0.75) from holding Weed Inc or give up 18.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Journey Medical Corp  vs.  Weed Inc

Journey Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Journey Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Journey Medical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Weed Inc

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Journey Medical and Weed

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

The idea behind Journey Medical Corp and Weed Inc 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 Stocks Directory module to find actively traded stocks across global markets.