Correlation Between Alumina and Lowell Farms
Can any of the company-specific risk be diversified away by investing in both Alumina 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 Alumina and Lowell Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alumina Limited and Lowell Farms, you can compare the effects of market volatilities on Alumina 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 Alumina with a short position of Lowell Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumina and Lowell Farms.
Diversification Opportunities for Alumina and Lowell Farms
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alumina and Lowell is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alumina Limited and Lowell Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowell Farms and Alumina 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 Alumina Limited 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 Alumina i.e., Alumina and Lowell Farms go up and down completely randomly.
Pair Corralation between Alumina and Lowell Farms
If you would invest 1.80 in Lowell Farms on August 29, 2024 and sell it today you would lose (0.10) from holding Lowell Farms or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Alumina Limited vs. Lowell Farms
Performance |
| Timeline |
| Alumina Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lowell Farms |
Alumina and Lowell Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumina and Lowell Farms
The main advantage of trading using opposite Alumina and Lowell Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumina 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.| Alumina vs. American Axle Manufacturing | Alumina vs. Rumble Inc | Alumina vs. NETGEAR | Alumina vs. BorgWarner |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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