Correlation Between Heritage Cannabis and Avicanna

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

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

Diversification Opportunities for Heritage Cannabis and Avicanna

0.16

Correlation Coefficient

Heritage Cannabis  Avicanna

Average diversification

The 3 months correlation between Heritage and Avicanna is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Cannabis Holdings and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and Heritage Cannabis 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 Heritage Cannabis Holdings are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of Heritage Cannabis i.e., Heritage Cannabis and Avicanna go up and down completely randomly.

Pair Corralation between Heritage Cannabis and Avicanna

If you would invest  25.00  in Avicanna on September 12, 2024 and sell it today you would lose (2.00) from holding Avicanna or give up 8.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Heritage Cannabis Holdings  vs.  Avicanna

Heritage Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

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

Avicanna

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avicanna are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Avicanna may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Heritage Cannabis and Avicanna

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

The idea behind Heritage Cannabis Holdings and Avicanna 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.