Correlation Between Hempfusion Wellness and HempAmericana

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

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

Diversification Opportunities for Hempfusion Wellness and HempAmericana

1.0

Correlation Coefficient

Hempfusion Wellness  HempAmericana

No risk reduction

The 3 months correlation between Hempfusion and HempAmericana is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Hempfusion Wellness and HempAmericana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HempAmericana and Hempfusion Wellness 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 Hempfusion Wellness are associated (or correlated) with HempAmericana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HempAmericana has no effect on the direction of Hempfusion Wellness i.e., Hempfusion Wellness and HempAmericana go up and down completely randomly.

Pair Corralation between Hempfusion Wellness and HempAmericana

If you would invest  0.02  in Hempfusion Wellness on August 26, 2024 and sell it today you would lose (0.01) from holding Hempfusion Wellness or give up 50.0% of portfolio value over 90 days.

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

Hempfusion Wellness  vs.  HempAmericana

Hempfusion Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hempfusion Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Hempfusion Wellness is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

HempAmericana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HempAmericana has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, HempAmericana is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hempfusion Wellness and HempAmericana

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

The idea behind Hempfusion Wellness and HempAmericana 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.