Correlation Between Delta 9 and Entourage Health

Can any of the company-specific risk be diversified away by investing in both Delta 9 and Entourage Health 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 Delta 9 and Entourage Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delta 9 Cannabis and Entourage Health Corp, you can compare the effects of market volatilities on Delta 9 and Entourage Health 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 Delta 9 with a short position of Entourage Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta 9 and Entourage Health.

Diversification Opportunities for Delta 9 and Entourage Health

0.0

Correlation Coefficient

Delta 9  Entourage Health

Pay attention - limited upside

The 3 months correlation between Delta and Entourage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Delta 9 Cannabis and Entourage Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entourage Health Corp and Delta 9 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 Delta 9 Cannabis are associated (or correlated) with Entourage Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entourage Health Corp has no effect on the direction of Delta 9 i.e., Delta 9 and Entourage Health go up and down completely randomly.

Pair Corralation between Delta 9 and Entourage Health

Assuming the 90 days horizon Delta 9 is expected to generate 6.66 times less return on investment than Entourage Health. But when comparing it to its historical volatility, Delta 9 Cannabis is 1.41 times less risky than Entourage Health. It trades about 0.01 of its potential returns per unit of risk. Entourage Health Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.47  in Entourage Health Corp on September 20, 2024 and sell it today you would lose (0.69) from holding Entourage Health Corp or give up 46.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Delta 9 Cannabis  vs.  Entourage Health Corp

Delta 9 Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta 9 Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Delta 9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Entourage Health Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Entourage Health Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Entourage Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta 9 and Entourage Health

The main advantage of trading using opposite Delta 9 and Entourage Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta 9 position performs unexpectedly, Entourage Health 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 Entourage Health will offset losses from the drop in Entourage Health's long position.

The idea behind Delta 9 Cannabis and Entourage Health 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.