Correlation Between StateHouse Holdings and Marijuana

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

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

Diversification Opportunities for StateHouse Holdings and Marijuana

0.12

Correlation Coefficient

StateHouse Holdings  Marijuana

Average diversification

The 3 months correlation between StateHouse and Marijuana is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding StateHouse Holdings and Marijuana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marijuana and StateHouse Holdings 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 StateHouse Holdings are associated (or correlated) with Marijuana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marijuana has no effect on the direction of StateHouse Holdings i.e., StateHouse Holdings and Marijuana go up and down completely randomly.

Pair Corralation between StateHouse Holdings and Marijuana

Assuming the 90 days horizon StateHouse Holdings is expected to generate 0.56 times more return on investment than Marijuana. However, StateHouse Holdings is 1.8 times less risky than Marijuana. It trades about -0.06 of its potential returns per unit of risk. Marijuana is currently generating about -0.13 per unit of risk. If you would invest  2.50  in StateHouse Holdings on September 20, 2024 and sell it today you would lose (1.00) from holding StateHouse Holdings or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

StateHouse Holdings  vs.  Marijuana

StateHouse Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StateHouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Marijuana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marijuana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with StateHouse Holdings and Marijuana

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

The idea behind StateHouse Holdings and Marijuana 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..