Correlation Between Briacell Therapeutics and Lovesac

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

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

Diversification Opportunities for Briacell Therapeutics and Lovesac

0.62

Correlation Coefficient

Briacell Therapeutics  Lovesac

Poor diversification

The 3 months correlation between Briacell and Lovesac is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Briacell Therapeutics Corp and The Lovesac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lovesac and Briacell Therapeutics 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 Briacell Therapeutics Corp are associated (or correlated) with Lovesac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lovesac has no effect on the direction of Briacell Therapeutics i.e., Briacell Therapeutics and Lovesac go up and down completely randomly.

Pair Corralation between Briacell Therapeutics and Lovesac

Given the investment horizon of 90 days Briacell Therapeutics Corp is expected to under-perform the Lovesac. In addition to that, Briacell Therapeutics is 1.44 times more volatile than The Lovesac. It trades about -0.06 of its total potential returns per unit of risk. The Lovesac is currently generating about 0.11 per unit of volatility. If you would invest  1,509  in The Lovesac on January 25, 2024 and sell it today you would earn a total of  734.00  from holding The Lovesac or generate 48.64% return on investment over 90 days.

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

Briacell Therapeutics Corp  vs.  The Lovesac

Briacell Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Briacell Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Lovesac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Lovesac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lovesac is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Briacell Therapeutics and Lovesac

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

The idea behind Briacell Therapeutics Corp and The Lovesac 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.