Correlation Between Im Cannabis and Allstate

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

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

Diversification Opportunities for Im Cannabis and Allstate

0.72

Correlation Coefficient

Im Cannabis  Allstate

Poor diversification

The 3 months correlation between IMCC and Allstate is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Im Cannabis Corp and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Im 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 Im Cannabis Corp are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Im Cannabis i.e., Im Cannabis and Allstate go up and down completely randomly.

Pair Corralation between Im Cannabis and Allstate

Given the investment horizon of 90 days Im Cannabis Corp is expected to generate 14.46 times more return on investment than Allstate. However, Im Cannabis is 14.46 times more volatile than The Allstate. It trades about 0.07 of its potential returns per unit of risk. The Allstate is currently generating about -0.18 per unit of risk. If you would invest  60.00  in Im Cannabis Corp on February 22, 2024 and sell it today you would earn a total of  3.00  from holding Im Cannabis Corp or generate 5.0% return on investment over 90 days.

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

Im Cannabis Corp  vs.  The Allstate

Im Cannabis Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Im Cannabis Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Im Cannabis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Allstate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Allstate is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Im Cannabis and Allstate

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

The idea behind Im Cannabis Corp and The Allstate 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.