Correlation Between Smart Cannabis and Petro Usa

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

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

Diversification Opportunities for Smart Cannabis and Petro Usa

-0.38

Correlation Coefficient

Smart Cannabis  Petro Usa

Very good diversification

The 3 months correlation between Smart and Petro is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Smart Cannabis Corp and Petro Usa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Usa and Smart Cannabis 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 Smart Cannabis Corp are associated (or correlated) with Petro Usa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Usa has no effect on the direction of Smart Cannabis i.e., Smart Cannabis and Petro Usa go up and down completely randomly.

Pair Corralation between Smart Cannabis and Petro Usa

If you would invest  500.00  in Petro Usa on March 10, 2024 and sell it today you would earn a total of  0.00  from holding Petro Usa or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Smart Cannabis Corp  vs.  Petro Usa

Smart Cannabis Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Cannabis Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Smart Cannabis sustained solid returns over the last few months and may actually be approaching a breakup point.

Petro Usa

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petro Usa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Petro Usa revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smart Cannabis and Petro Usa

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

The idea behind Smart Cannabis Corp and Petro Usa 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.