Correlation Between Charlottes Web and Avicanna
Can any of the company-specific risk be diversified away by investing in both Charlottes Web and Avicanna 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 Avicanna 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 Avicanna, you can compare the effects of market volatilities on Charlottes Web and Avicanna 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 Avicanna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charlottes Web and Avicanna.
Diversification Opportunities for Charlottes Web and Avicanna
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Charlottes and Avicanna is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Charlottes Web Holdings and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna 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 Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of Charlottes Web i.e., Charlottes Web and Avicanna go up and down completely randomly.
Pair Corralation between Charlottes Web and Avicanna
Assuming the 90 days trading horizon Charlottes Web Holdings is expected to under-perform the Avicanna. But the stock apears to be less risky and, when comparing its historical volatility, Charlottes Web Holdings is 1.38 times less risky than Avicanna. The stock trades about -0.07 of its potential returns per unit of risk. The Avicanna is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Avicanna on August 31, 2024 and sell it today you would earn a total of 2.00 from holding Avicanna or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charlottes Web Holdings vs. Avicanna
Performance |
| Timeline |
| Charlottes Web Holdings |
| Avicanna |
Charlottes Web and Avicanna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charlottes Web and Avicanna
The main advantage of trading using opposite Charlottes Web and Avicanna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charlottes Web position performs unexpectedly, Avicanna 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 Avicanna will offset losses from the drop in Avicanna's long position.| Charlottes Web vs. iShares Canadian HYBrid | Charlottes Web vs. Brompton European Dividend | Charlottes Web vs. Solar Alliance Energy | Charlottes Web vs. PHN Multi Style All Cap |
| Avicanna vs. Pharmacielo | Avicanna vs. Medipharm Labs Corp | Avicanna vs. Cardiol Therapeutics Class | Avicanna vs. Charlottes Web 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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