Correlation Between OptiNose and CbdMD

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

By analyzing existing cross correlation between OptiNose and cbdMD Inc, you can compare the effects of market volatilities on OptiNose and CbdMD 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 OptiNose with a short position of CbdMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of OptiNose and CbdMD.

Diversification Opportunities for OptiNose and CbdMD

-0.1

Correlation Coefficient

OptiNose  CbdMD

Good diversification

The 3 months correlation between OptiNose and CbdMD is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding OptiNose and cbdMD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cbdMD Inc and OptiNose 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 OptiNose are associated (or correlated) with CbdMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cbdMD Inc has no effect on the direction of OptiNose i.e., OptiNose and CbdMD go up and down completely randomly.

Pair Corralation between OptiNose and CbdMD

Given the investment horizon of 90 days OptiNose is expected to under-perform the CbdMD. In addition to that, OptiNose is 1.12 times more volatile than cbdMD Inc. It trades about -0.07 of its total potential returns per unit of risk. cbdMD Inc is currently generating about 0.04 per unit of volatility. If you would invest  67.00  in cbdMD Inc on February 26, 2024 and sell it today you would earn a total of  3.00  from holding cbdMD Inc or generate 4.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

OptiNose  vs.  cbdMD Inc

OptiNose

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OptiNose 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 very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

cbdMD Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in cbdMD Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, CbdMD may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with OptiNose and CbdMD

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

The idea behind OptiNose and cbdMD Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.