Correlation Between Enanta Pharmaceuticals and Canopy Growth
Can any of the company-specific risk be diversified away by investing in both Enanta Pharmaceuticals 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 Enanta Pharmaceuticals and Canopy Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enanta Pharmaceuticals and Canopy Growth Corp, you can compare the effects of market volatilities on Enanta Pharmaceuticals 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 Enanta Pharmaceuticals with a short position of Canopy Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enanta Pharmaceuticals and Canopy Growth.
Diversification Opportunities for Enanta Pharmaceuticals and Canopy Growth
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enanta and Canopy is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Enanta Pharmaceuticals 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 Enanta Pharmaceuticals 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 Enanta Pharmaceuticals 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 Enanta Pharmaceuticals i.e., Enanta Pharmaceuticals and Canopy Growth go up and down completely randomly.
Pair Corralation between Enanta Pharmaceuticals and Canopy Growth
Given the investment horizon of 90 days Enanta Pharmaceuticals is expected to under-perform the Canopy Growth. But the stock apears to be less risky and, when comparing its historical volatility, Enanta Pharmaceuticals is 2.6 times less risky than Canopy Growth. The stock trades about -0.5 of its potential returns per unit of risk. The Canopy Growth Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 459.00 in Canopy Growth Corp on September 1, 2024 and sell it today you would lose (72.00) from holding Canopy Growth Corp or give up 15.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enanta Pharmaceuticals vs. Canopy Growth Corp
Performance |
| Timeline |
| Enanta Pharmaceuticals |
| Canopy Growth Corp |
Enanta Pharmaceuticals and Canopy Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enanta Pharmaceuticals and Canopy Growth
The main advantage of trading using opposite Enanta Pharmaceuticals and Canopy Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enanta Pharmaceuticals 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.| Enanta Pharmaceuticals vs. Monte Rosa Therapeutics | Enanta Pharmaceuticals vs. Design Therapeutics | Enanta Pharmaceuticals vs. Werewolf Therapeutics | Enanta Pharmaceuticals vs. Ikena Oncology |
| Canopy Growth vs. Crinetics Pharmaceuticals | Canopy Growth vs. Enanta Pharmaceuticals | Canopy Growth vs. Amicus Therapeutics | Canopy Growth vs. Connect Biopharma 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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