Correlation Between Charlottes Web and 4Front Ventures
Can any of the company-specific risk be diversified away by investing in both Charlottes Web and 4Front Ventures 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 4Front Ventures 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 4Front Ventures Corp, you can compare the effects of market volatilities on Charlottes Web and 4Front Ventures 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 4Front Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charlottes Web and 4Front Ventures.
Diversification Opportunities for Charlottes Web and 4Front Ventures
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charlottes and 4Front is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Charlottes Web Holdings and 4Front Ventures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4Front Ventures 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 4Front Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4Front Ventures Corp has no effect on the direction of Charlottes Web i.e., Charlottes Web and 4Front Ventures go up and down completely randomly.
Pair Corralation between Charlottes Web and 4Front Ventures
Assuming the 90 days horizon Charlottes Web Holdings is expected to generate 0.36 times more return on investment than 4Front Ventures. However, Charlottes Web Holdings is 2.74 times less risky than 4Front Ventures. It trades about -0.28 of its potential returns per unit of risk. 4Front Ventures Corp is currently generating about -0.31 per unit of risk. If you would invest 14.00 in Charlottes Web Holdings on September 13, 2024 and sell it today you would lose (3.00) from holding Charlottes Web Holdings or give up 21.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charlottes Web Holdings vs. 4Front Ventures Corp
Performance |
| Timeline |
| Charlottes Web Holdings |
| 4Front Ventures Corp |
Charlottes Web and 4Front Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charlottes Web and 4Front Ventures
The main advantage of trading using opposite Charlottes Web and 4Front Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charlottes Web position performs unexpectedly, 4Front Ventures 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 4Front Ventures will offset losses from the drop in 4Front Ventures' long position.| Charlottes Web vs. 4Front Ventures Corp | Charlottes Web vs. Khiron Life Sciences | Charlottes Web vs. BellRock Brands | Charlottes Web vs. Elixinol Global |
| 4Front Ventures vs. Khiron Life Sciences | 4Front Ventures vs. BellRock Brands | 4Front Ventures vs. Elixinol Global |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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