Correlation Between MDJM and CBL Associates

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

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

Diversification Opportunities for MDJM and CBL Associates

-0.7

Correlation Coefficient

MDJM  CBL Associates

Excellent diversification

The 3 months correlation between MDJM and CBL is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding MDJM and CBL Associates Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL Associates Properties and MDJM 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 MDJM are associated (or correlated) with CBL Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL Associates Properties has no effect on the direction of MDJM i.e., MDJM and CBL Associates go up and down completely randomly.

Pair Corralation between MDJM and CBL Associates

Given the investment horizon of 90 days MDJM is expected to under-perform the CBL Associates. In addition to that, MDJM is 5.21 times more volatile than CBL Associates Properties. It trades about -0.02 of its total potential returns per unit of risk. CBL Associates Properties is currently generating about 0.05 per unit of volatility. If you would invest  2,296  in CBL Associates Properties on September 2, 2024 and sell it today you would earn a total of  794.00  from holding CBL Associates Properties or generate 34.58% return on investment over 90 days.

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

MDJM  vs.  CBL Associates Properties

MDJM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

CBL Associates Properties

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, CBL Associates disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MDJM and CBL Associates

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

The idea behind MDJM and CBL Associates Properties 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.