Correlation Between Berkeley Energy and Lowell Farms
Can any of the company-specific risk be diversified away by investing in both Berkeley Energy 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 Berkeley Energy and Lowell Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkeley Energy and Lowell Farms, you can compare the effects of market volatilities on Berkeley Energy 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 Berkeley Energy with a short position of Lowell Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkeley Energy and Lowell Farms.
Diversification Opportunities for Berkeley Energy and Lowell Farms
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkeley and Lowell is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Berkeley Energy and Lowell Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowell Farms and Berkeley 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 Berkeley Energy 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 Berkeley Energy i.e., Berkeley Energy and Lowell Farms go up and down completely randomly.
Pair Corralation between Berkeley Energy and Lowell Farms
Assuming the 90 days horizon Berkeley Energy is expected to generate 5.13 times less return on investment than Lowell Farms. But when comparing it to its historical volatility, Berkeley Energy is 17.56 times less risky than Lowell Farms. It trades about 0.21 of its potential returns per unit of risk. Lowell Farms is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkeley Energy vs. Lowell Farms
Performance |
| Timeline |
| Berkeley Energy |
| Lowell Farms |
Berkeley Energy and Lowell Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkeley Energy and Lowell Farms
The main advantage of trading using opposite Berkeley Energy and Lowell Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkeley Energy 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.| Berkeley Energy vs. Isoenergy | Berkeley Energy vs. Paladin Energy | Berkeley Energy vs. F3 Uranium Corp | Berkeley Energy vs. enCore Energy Corp |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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