Correlation Between Charlottes Web and General Cannabis
Can any of the company-specific risk be diversified away by investing in both Charlottes Web and General Cannabis 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 Charlottes Web and General Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charlottes Web Holdings and General Cannabis Corp, you can compare the effects of market volatilities on Charlottes Web and General Cannabis 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 Charlottes Web with a short position of General Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charlottes Web and General Cannabis.
Diversification Opportunities for Charlottes Web and General Cannabis
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Charlottes and General is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Charlottes Web Holdings and General Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Cannabis Corp and Charlottes Web 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 Charlottes Web Holdings are associated (or correlated) with General Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Cannabis Corp has no effect on the direction of Charlottes Web i.e., Charlottes Web and General Cannabis go up and down completely randomly.
Pair Corralation between Charlottes Web and General Cannabis
Assuming the 90 days horizon Charlottes Web Holdings is expected to generate 0.55 times more return on investment than General Cannabis. However, Charlottes Web Holdings is 1.82 times less risky than General Cannabis. It trades about -0.1 of its potential returns per unit of risk. General Cannabis Corp is currently generating about -0.14 per unit of risk. If you would invest 14.00 in Charlottes Web Holdings on August 30, 2024 and sell it today you would lose (2.00) from holding Charlottes Web Holdings or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charlottes Web Holdings vs. General Cannabis Corp
Performance |
| Timeline |
| Charlottes Web Holdings |
| General Cannabis Corp |
Charlottes Web and General Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charlottes Web and General Cannabis
The main advantage of trading using opposite Charlottes Web and General Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charlottes Web position performs unexpectedly, General Cannabis 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 General Cannabis will offset losses from the drop in General Cannabis' long position.| Charlottes Web vs. Green Cures Botanical | Charlottes Web vs. Cann American Corp | Charlottes Web vs. Rimrock Gold Corp | Charlottes Web vs. Galexxy Holdings |
| General Cannabis vs. Verano Holdings Corp | General Cannabis vs. 4Front Ventures Corp | General Cannabis vs. Ascend Wellness Holdings | General Cannabis vs. Medicine Man Technologies |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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