Correlation Between EVIO and Cann American

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

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

Diversification Opportunities for EVIO and Cann American

-0.02

Correlation Coefficient

EVIO  Cann American

Good diversification

The 3 months correlation between EVIO and Cann is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding EVIO Inc 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 EVIO 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 EVIO Inc 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 EVIO i.e., EVIO and Cann American go up and down completely randomly.

Pair Corralation between EVIO and Cann American

Given the investment horizon of 90 days EVIO Inc is expected to generate 18.71 times more return on investment than Cann American. However, EVIO is 18.71 times more volatile than Cann American Corp. It trades about 0.39 of its potential returns per unit of risk. Cann American Corp is currently generating about 0.09 per unit of risk. If you would invest  0.01  in EVIO Inc on September 5, 2024 and sell it today you would lose (0.01) from holding EVIO Inc or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

EVIO Inc  vs.  Cann American Corp

EVIO Inc

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EVIO Inc are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, EVIO displayed solid returns over the last few months and may actually be approaching a breakup point.

Cann American Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cann American Corp are ranked lower than 2 (%) 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 EVIO and Cann American

The main advantage of trading using opposite EVIO and Cann American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVIO 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 EVIO Inc 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.