Correlation Between Canopy Growth and Hexo Corp
Can any of the company-specific risk be diversified away by investing in both Canopy Growth and Hexo Corp 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 Hexo Corp 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 Hexo Corp, you can compare the effects of market volatilities on Canopy Growth and Hexo Corp 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 Hexo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and Hexo Corp.
Diversification Opportunities for Canopy Growth and Hexo Corp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canopy and Hexo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and Hexo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexo Corp 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 Hexo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexo Corp has no effect on the direction of Canopy Growth i.e., Canopy Growth and Hexo Corp go up and down completely randomly.
Pair Corralation between Canopy Growth and Hexo Corp
Considering the 90-day investment horizon Canopy Growth Corp is expected to generate 2.78 times more return on investment than Hexo Corp. However, Canopy Growth is 2.78 times more volatile than Hexo Corp. It trades about 0.03 of its potential returns per unit of risk. Hexo Corp is currently generating about -0.35 per unit of risk. If you would invest 783.00 in Canopy Growth Corp on August 27, 2024 and sell it today you would lose (393.00) from holding Canopy Growth Corp or give up 50.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.83% |
| Values | Daily Returns |
Canopy Growth Corp vs. Hexo Corp
Performance |
| Timeline |
| Canopy Growth Corp |
| Hexo Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Canopy Growth and Hexo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canopy Growth and Hexo Corp
The main advantage of trading using opposite Canopy Growth and Hexo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canopy Growth position performs unexpectedly, Hexo Corp 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 Hexo Corp will offset losses from the drop in Hexo Corp's long position.| Canopy Growth vs. Aldel Financial II | Canopy Growth vs. Highway Holdings Limited | Canopy Growth vs. Inflection Point Acquisition | Canopy Growth vs. Barrick Gold Corp |
| Hexo Corp vs. Aurora Cannabis | Hexo Corp vs. Canopy Growth Corp | Hexo Corp vs. Curaleaf Holdings | Hexo Corp vs. OrganiGram Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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