Correlation Between 22nd Century and Humble Fume

Can any of the company-specific risk be diversified away by investing in both 22nd Century and Humble Fume 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 22nd Century and Humble Fume into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 22nd Century Group and Humble Fume, you can compare the effects of market volatilities on 22nd Century and Humble Fume 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 22nd Century with a short position of Humble Fume. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22nd Century and Humble Fume.

Diversification Opportunities for 22nd Century and Humble Fume

0.72

Correlation Coefficient

22nd Century  Humble Fume

Poor diversification

The 3 months correlation between 22nd and Humble is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding 22nd Century Group and Humble Fume in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humble Fume and 22nd Century 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 22nd Century Group are associated (or correlated) with Humble Fume. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humble Fume has no effect on the direction of 22nd Century i.e., 22nd Century and Humble Fume go up and down completely randomly.

Pair Corralation between 22nd Century and Humble Fume

If you would invest  5.34  in Humble Fume on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Humble Fume or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

22nd Century Group  vs.  Humble Fume

22nd Century Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 22nd Century Group 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 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.

Humble Fume

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humble Fume has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Humble Fume is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with 22nd Century and Humble Fume

The main advantage of trading using opposite 22nd Century and Humble Fume positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22nd Century position performs unexpectedly, Humble Fume 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 Humble Fume will offset losses from the drop in Humble Fume's long position.

The idea behind 22nd Century Group and Humble Fume 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.