Correlation Between Cardano and Lowell Farms
Can any of the company-specific risk be diversified away by investing in both Cardano and Lowell Farms 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 Cardano and Lowell Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and Lowell Farms, you can compare the effects of market volatilities on Cardano and Lowell Farms 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 Cardano with a short position of Lowell Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Lowell Farms.
Diversification Opportunities for Cardano and Lowell Farms
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardano and Lowell is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Lowell Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowell Farms and Cardano 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 Cardano are associated (or correlated) with Lowell Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowell Farms has no effect on the direction of Cardano i.e., Cardano and Lowell Farms go up and down completely randomly.
Pair Corralation between Cardano and Lowell Farms
Assuming the 90 days trading horizon Cardano is expected to generate 1.57 times less return on investment than Lowell Farms. But when comparing it to its historical volatility, Cardano is 3.0 times less risky than Lowell Farms. It trades about 0.08 of its potential returns per unit of risk. Lowell Farms is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 75.00 in Lowell Farms on November 2, 2024 and sell it today you would lose (73.80) from holding Lowell Farms or give up 98.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 60.32% |
| Values | Daily Returns |
Cardano vs. Lowell Farms
Performance |
| Timeline |
| Cardano |
| Lowell Farms |
Cardano and Lowell Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardano and Lowell Farms
The main advantage of trading using opposite Cardano and Lowell Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, Lowell Farms 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 Lowell Farms will offset losses from the drop in Lowell Farms' long position.The idea behind Cardano and Lowell Farms 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.| Lowell Farms vs. Medicine Man Technologies | Lowell Farms vs. Ascend Wellness Holdings | Lowell Farms vs. Goodness Growth Holdings | Lowell Farms vs. AYR Strategies Class |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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