Correlation Between Eq Energy and American Cannabis

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

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

Diversification Opportunities for Eq Energy and American Cannabis

0.41

Correlation Coefficient

Eq Energy  American Cannabis

Very weak diversification

The 3 months correlation between EQLB and American is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eq Energy Drink and American Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Cannabis and Eq Energy 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 Eq Energy Drink 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 Eq Energy i.e., Eq Energy and American Cannabis go up and down completely randomly.

Pair Corralation between Eq Energy and American Cannabis

Given the investment horizon of 90 days Eq Energy Drink is expected to generate 1.63 times more return on investment than American Cannabis. However, Eq Energy is 1.63 times more volatile than American Cannabis. It trades about 0.12 of its potential returns per unit of risk. American Cannabis is currently generating about 0.08 per unit of risk. If you would invest  0.10  in Eq Energy Drink on May 22, 2025 and sell it today you would lose (0.02) from holding Eq Energy Drink or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Eq Energy Drink  vs.  American Cannabis

Eq Energy Drink

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Eq Energy Drink are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Eq Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

American Cannabis

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in American Cannabis are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, American Cannabis revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eq Energy and American Cannabis

The main advantage of trading using opposite Eq Energy and American Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eq Energy 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 Eq Energy Drink 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.