Correlation Between CbdMD and Biogen
Can any of the company-specific risk be diversified away by investing in both CbdMD and Biogen 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 CbdMD and Biogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cbdMD Inc and Biogen Inc, you can compare the effects of market volatilities on CbdMD and Biogen 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 CbdMD with a short position of Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CbdMD and Biogen.
Diversification Opportunities for CbdMD and Biogen
Pay attention - limited upside
The 3 months correlation between CbdMD and Biogen is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc and CbdMD 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 cbdMD Inc are associated (or correlated) with Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of CbdMD i.e., CbdMD and Biogen go up and down completely randomly.
Pair Corralation between CbdMD and Biogen
Given the investment horizon of 90 days cbdMD Inc is expected to under-perform the Biogen. In addition to that, CbdMD is 4.03 times more volatile than Biogen Inc. It trades about -0.16 of its total potential returns per unit of risk. Biogen Inc is currently generating about 0.12 per unit of volatility. If you would invest 20,890 in Biogen Inc on February 26, 2024 and sell it today you would earn a total of 891.00 from holding Biogen Inc or generate 4.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
cbdMD Inc vs. Biogen Inc
Performance |
Timeline |
cbdMD Inc |
Biogen Inc |
CbdMD and Biogen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CbdMD and Biogen
The main advantage of trading using opposite CbdMD and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CbdMD position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.CbdMD vs. PetIQ Inc | CbdMD vs. Emergent Biosolutions | CbdMD vs. Neurocrine Biosciences | CbdMD vs. Haleon plc |
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Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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