Correlation Between 4Front Ventures and Emergent Health
Can any of the company-specific risk be diversified away by investing in both 4Front Ventures and Emergent Health 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 4Front Ventures and Emergent Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 4Front Ventures Corp and Emergent Health Corp, you can compare the effects of market volatilities on 4Front Ventures and Emergent Health 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 4Front Ventures with a short position of Emergent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4Front Ventures and Emergent Health.
Diversification Opportunities for 4Front Ventures and Emergent Health
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 4Front and Emergent is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding 4Front Ventures Corp and Emergent Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Health Corp and 4Front Ventures 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 4Front Ventures Corp are associated (or correlated) with Emergent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Health Corp has no effect on the direction of 4Front Ventures i.e., 4Front Ventures and Emergent Health go up and down completely randomly.
Pair Corralation between 4Front Ventures and Emergent Health
Assuming the 90 days horizon 4Front Ventures Corp is expected to under-perform the Emergent Health. In addition to that, 4Front Ventures is 1.29 times more volatile than Emergent Health Corp. It trades about -0.29 of its total potential returns per unit of risk. Emergent Health Corp is currently generating about -0.04 per unit of volatility. If you would invest 0.10 in Emergent Health Corp on September 19, 2024 and sell it today you would lose (0.01) from holding Emergent Health Corp or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
4Front Ventures Corp vs. Emergent Health Corp
Performance |
| Timeline |
| 4Front Ventures Corp |
| Emergent Health Corp |
4Front Ventures and Emergent Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 4Front Ventures and Emergent Health
The main advantage of trading using opposite 4Front Ventures and Emergent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4Front Ventures position performs unexpectedly, Emergent Health 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 Emergent Health will offset losses from the drop in Emergent Health's long position.| 4Front Ventures vs. Goodness Growth Holdings | 4Front Ventures vs. Body and Mind | 4Front Ventures vs. Rubicon Organics | 4Front Ventures vs. CLS Holdings USA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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