Correlation Between Design Therapeutics and Canopy Growth
Can any of the company-specific risk be diversified away by investing in both Design Therapeutics and Canopy 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 Design Therapeutics and Canopy Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Design Therapeutics and Canopy Growth Corp, you can compare the effects of market volatilities on Design Therapeutics and Canopy 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 Design Therapeutics with a short position of Canopy Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design Therapeutics and Canopy Growth.
Diversification Opportunities for Design Therapeutics and Canopy Growth
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Design and Canopy is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and Canopy Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canopy Growth Corp and Design Therapeutics 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 Design Therapeutics are associated (or correlated) with Canopy Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canopy Growth Corp has no effect on the direction of Design Therapeutics i.e., Design Therapeutics and Canopy Growth go up and down completely randomly.
Pair Corralation between Design Therapeutics and Canopy Growth
Given the investment horizon of 90 days Design Therapeutics is expected to generate 1.0 times more return on investment than Canopy Growth. However, Design Therapeutics is 1.0 times less risky than Canopy Growth. It trades about 0.04 of its potential returns per unit of risk. Canopy Growth Corp is currently generating about -0.21 per unit of risk. If you would invest 553.00 in Design Therapeutics on August 27, 2024 and sell it today you would earn a total of 9.00 from holding Design Therapeutics or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Design Therapeutics vs. Canopy Growth Corp
Performance |
| Timeline |
| Design Therapeutics |
| Canopy Growth Corp |
Design Therapeutics and Canopy Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Design Therapeutics and Canopy Growth
The main advantage of trading using opposite Design Therapeutics and Canopy Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design Therapeutics position performs unexpectedly, Canopy 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 Canopy Growth will offset losses from the drop in Canopy Growth's long position.| Design Therapeutics vs. Monte Rosa Therapeutics | Design Therapeutics vs. Werewolf Therapeutics | Design Therapeutics vs. Ikena Oncology | Design Therapeutics vs. Stoke Therapeutics |
| Canopy Growth vs. Aldel Financial II | Canopy Growth vs. Highway Holdings Limited | Canopy Growth vs. Inflection Point Acquisition | Canopy Growth vs. Barrick Gold Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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