Correlation Between Mizuho Financial and American Cannabis

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

By analyzing existing cross correlation between Mizuho Financial Group and American Cannabis, you can compare the effects of market volatilities on Mizuho Financial and American Cannabis 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 Mizuho Financial with a short position of American Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizuho Financial and American Cannabis.

Diversification Opportunities for Mizuho Financial and American Cannabis

-0.44

Correlation Coefficient

Mizuho Financial  American Cannabis

Very good diversification

The 3 months correlation between Mizuho and American is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Mizuho Financial Group and American Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Cannabis and Mizuho Financial 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 Mizuho Financial Group are associated (or correlated) with American Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Cannabis has no effect on the direction of Mizuho Financial i.e., Mizuho Financial and American Cannabis go up and down completely randomly.

Pair Corralation between Mizuho Financial and American Cannabis

Assuming the 90 days horizon Mizuho Financial Group is expected to generate 0.03 times more return on investment than American Cannabis. However, Mizuho Financial Group is 30.8 times less risky than American Cannabis. It trades about 0.11 of its potential returns per unit of risk. American Cannabis is currently generating about -0.04 per unit of risk. If you would invest  1,966  in Mizuho Financial Group on February 27, 2024 and sell it today you would earn a total of  33.00  from holding Mizuho Financial Group or generate 1.68% return on investment over 90 days.

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

Mizuho Financial Group  vs.  American Cannabis

Mizuho Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Mizuho Financial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

American Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's primary indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Mizuho Financial and American Cannabis

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

The idea behind Mizuho Financial Group and American Cannabis 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.