Correlation Between Tilray and BC Bud

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

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

Diversification Opportunities for Tilray and BC Bud

-0.93

Correlation Coefficient

Tilray  BC Bud

Pay attention - limited upside

The 3 months correlation between Tilray and BCBCF is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and The BC Bud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Bud and Tilray 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 Tilray Inc are associated (or correlated) with BC Bud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Bud has no effect on the direction of Tilray i.e., Tilray and BC Bud go up and down completely randomly.

Pair Corralation between Tilray and BC Bud

Given the investment horizon of 90 days Tilray Inc is expected to under-perform the BC Bud. But the stock apears to be less risky and, when comparing its historical volatility, Tilray Inc is 4.47 times less risky than BC Bud. The stock trades about -0.01 of its potential returns per unit of risk. The The BC Bud is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6.41  in The BC Bud on September 19, 2024 and sell it today you would earn a total of  0.78  from holding The BC Bud or generate 12.17% return on investment over 90 days.

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

Tilray Inc  vs.  The BC Bud

Tilray Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tilray Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly 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.

BC Bud

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The BC Bud are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, BC Bud reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tilray and BC Bud

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

The idea behind Tilray Inc and The BC Bud 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..