Correlation Between Canopy Growth and West Island
Can any of the company-specific risk be diversified away by investing in both Canopy Growth and West Island 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 West Island 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 West Island Brands, you can compare the effects of market volatilities on Canopy Growth and West Island 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 West Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and West Island.
Diversification Opportunities for Canopy Growth and West Island
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canopy and West is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and West Island Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Island Brands 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 West Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Island Brands has no effect on the direction of Canopy Growth i.e., Canopy Growth and West Island go up and down completely randomly.
Pair Corralation between Canopy Growth and West Island
Considering the 90-day investment horizon Canopy Growth Corp is expected to under-perform the West Island. But the stock apears to be less risky and, when comparing its historical volatility, Canopy Growth Corp is 9.69 times less risky than West Island. The stock trades about 0.0 of its potential returns per unit of risk. The West Island Brands is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9.00 in West Island Brands on August 29, 2024 and sell it today you would lose (8.65) from holding West Island Brands or give up 96.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canopy Growth Corp vs. West Island Brands
Performance |
| Timeline |
| Canopy Growth Corp |
| West Island Brands |
Canopy Growth and West Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canopy Growth and West Island
The main advantage of trading using opposite Canopy Growth and West Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canopy Growth position performs unexpectedly, West Island 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 West Island will offset losses from the drop in West Island's long position.| Canopy Growth vs. Ecolab Inc | Canopy Growth vs. Boston Beer | Canopy Growth vs. Codexis | Canopy Growth vs. Monster Beverage Corp |
| West Island vs. Canopy Growth Corp | West Island vs. Tilray Inc | West Island vs. Cronos Group | West Island vs. SNDL Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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