Correlation Between Avadel Pharmaceuticals and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both Avadel Pharmaceuticals and Cresco Labs 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 Avadel Pharmaceuticals and Cresco Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avadel Pharmaceuticals PLC and Cresco Labs, you can compare the effects of market volatilities on Avadel Pharmaceuticals and Cresco Labs 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 Avadel Pharmaceuticals with a short position of Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avadel Pharmaceuticals and Cresco Labs.
Diversification Opportunities for Avadel Pharmaceuticals and Cresco Labs
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avadel and Cresco is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Avadel Pharmaceuticals PLC and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs and Avadel Pharmaceuticals 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 Avadel Pharmaceuticals PLC are associated (or correlated) with Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Avadel Pharmaceuticals i.e., Avadel Pharmaceuticals and Cresco Labs go up and down completely randomly.
Pair Corralation between Avadel Pharmaceuticals and Cresco Labs
Given the investment horizon of 90 days Avadel Pharmaceuticals PLC is expected to generate 0.61 times more return on investment than Cresco Labs. However, Avadel Pharmaceuticals PLC is 1.64 times less risky than Cresco Labs. It trades about -0.02 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.02 per unit of risk. If you would invest 1,439 in Avadel Pharmaceuticals PLC on August 28, 2024 and sell it today you would lose (317.00) from holding Avadel Pharmaceuticals PLC or give up 22.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Avadel Pharmaceuticals PLC vs. Cresco Labs
Performance |
| Timeline |
| Avadel Pharmaceuticals |
| Cresco Labs |
Avadel Pharmaceuticals and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avadel Pharmaceuticals and Cresco Labs
The main advantage of trading using opposite Avadel Pharmaceuticals and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avadel Pharmaceuticals position performs unexpectedly, Cresco Labs 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 Cresco Labs will offset losses from the drop in Cresco Labs' long position.| Avadel Pharmaceuticals vs. Capricor Therapeutics | Avadel Pharmaceuticals vs. Soleno Therapeutics | Avadel Pharmaceuticals vs. Bio Path Holdings | Avadel Pharmaceuticals vs. Moleculin Biotech |
| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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