Correlation Between Charlottes Web and Flora Growth
Can any of the company-specific risk be diversified away by investing in both Charlottes Web and Flora Growth 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 Flora Growth 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 Flora Growth Corp, you can compare the effects of market volatilities on Charlottes Web and Flora Growth 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 Flora Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charlottes Web and Flora Growth.
Diversification Opportunities for Charlottes Web and Flora Growth
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Charlottes and Flora is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Charlottes Web Holdings and Flora Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flora Growth 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 Flora Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flora Growth Corp has no effect on the direction of Charlottes Web i.e., Charlottes Web and Flora Growth go up and down completely randomly.
Pair Corralation between Charlottes Web and Flora Growth
Assuming the 90 days horizon Charlottes Web Holdings is expected to under-perform the Flora Growth. But the otc stock apears to be less risky and, when comparing its historical volatility, Charlottes Web Holdings is 1.53 times less risky than Flora Growth. The otc stock trades about -0.03 of its potential returns per unit of risk. The Flora Growth Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 737.00 in Flora Growth Corp on November 2, 2024 and sell it today you would lose (660.01) from holding Flora Growth Corp or give up 89.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Charlottes Web Holdings vs. Flora Growth Corp
Performance |
| Timeline |
| Charlottes Web Holdings |
| Flora Growth Corp |
Charlottes Web and Flora Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charlottes Web and Flora Growth
The main advantage of trading using opposite Charlottes Web and Flora Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charlottes Web position performs unexpectedly, Flora Growth 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 Flora Growth will offset losses from the drop in Flora Growth's long position.| Charlottes Web vs. Verano Holdings Corp | Charlottes Web vs. Cresco Labs | Charlottes Web vs. AYR Strategies Class | Charlottes Web vs. Green Thumb Industries |
| Flora Growth vs. Clever Leaves Holdings | Flora Growth vs. Painreform | Flora Growth vs. INC Research Holdings | Flora Growth vs. Lowell Farms |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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