Correlation Between Marijuana Company and Amazon
Can any of the company-specific risk be diversified away by investing in both Marijuana Company and Amazon 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 Marijuana Company and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marijuana and Amazon Inc, you can compare the effects of market volatilities on Marijuana Company and Amazon 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 Marijuana Company with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marijuana Company and Amazon.
Diversification Opportunities for Marijuana Company and Amazon
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Marijuana and Amazon is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Marijuana and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Marijuana Company 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 Marijuana are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Marijuana Company i.e., Marijuana Company and Amazon go up and down completely randomly.
Pair Corralation between Marijuana Company and Amazon
Given the investment horizon of 90 days Marijuana is expected to generate 48.27 times more return on investment than Amazon. However, Marijuana Company is 48.27 times more volatile than Amazon Inc. It trades about 0.15 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.04 per unit of risk. If you would invest 0.08 in Marijuana on January 24, 2024 and sell it today you would lose (0.06) from holding Marijuana or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marijuana vs. Amazon Inc
Performance |
| Timeline |
| Marijuana Company |
| Amazon Inc |
Marijuana Company and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marijuana Company and Amazon
The main advantage of trading using opposite Marijuana Company and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marijuana Company position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Marijuana Company vs. Trust Stamp | Marijuana Company vs. Infobird Co | Marijuana Company vs. Versus Systems | Marijuana Company vs. MMTEC Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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