Correlation Between Canopy Growth and Connect Biopharma
Can any of the company-specific risk be diversified away by investing in both Canopy Growth and Connect Biopharma 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 Canopy Growth and Connect Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canopy Growth Corp and Connect Biopharma Holdings, you can compare the effects of market volatilities on Canopy Growth and Connect Biopharma 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 Canopy Growth with a short position of Connect Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and Connect Biopharma.
Diversification Opportunities for Canopy Growth and Connect Biopharma
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canopy and Connect is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and Connect Biopharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connect Biopharma and Canopy Growth 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 Canopy Growth Corp are associated (or correlated) with Connect Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connect Biopharma has no effect on the direction of Canopy Growth i.e., Canopy Growth and Connect Biopharma go up and down completely randomly.
Pair Corralation between Canopy Growth and Connect Biopharma
Considering the 90-day investment horizon Canopy Growth Corp is expected to generate 1.29 times more return on investment than Connect Biopharma. However, Canopy Growth is 1.29 times more volatile than Connect Biopharma Holdings. It trades about 0.04 of its potential returns per unit of risk. Connect Biopharma Holdings is currently generating about 0.04 per unit of risk. If you would invest 390.00 in Canopy Growth Corp on September 12, 2024 and sell it today you would lose (42.00) from holding Canopy Growth Corp or give up 10.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canopy Growth Corp vs. Connect Biopharma Holdings
Performance |
| Timeline |
| Canopy Growth Corp |
| Connect Biopharma |
Canopy Growth and Connect Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canopy Growth and Connect Biopharma
The main advantage of trading using opposite Canopy Growth and Connect Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canopy Growth position performs unexpectedly, Connect Biopharma 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 Connect Biopharma will offset losses from the drop in Connect Biopharma's long position.| Canopy Growth vs. Treasury Wine Estates | Canopy Growth vs. Vindicator Silver Lead Mining | Canopy Growth vs. Summit Materials | Canopy Growth vs. Keurig Dr Pepper |
| Connect Biopharma vs. Equillium | Connect Biopharma vs. DiaMedica Therapeutics | Connect Biopharma vs. Valneva SE ADR | Connect Biopharma vs. Vivani Medical |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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