Correlation Between 4Front Ventures and Western Sierra
Can any of the company-specific risk be diversified away by investing in both 4Front Ventures and Western Sierra 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 Western Sierra 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 Western Sierra Mining, you can compare the effects of market volatilities on 4Front Ventures and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4Front Ventures and Western Sierra.
Diversification Opportunities for 4Front Ventures and Western Sierra
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 4Front and Western is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding 4Front Ventures Corp and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of 4Front Ventures i.e., 4Front Ventures and Western Sierra go up and down completely randomly.
Pair Corralation between 4Front Ventures and Western Sierra
Assuming the 90 days horizon 4Front Ventures Corp is expected to generate 1.49 times more return on investment than Western Sierra. However, 4Front Ventures is 1.49 times more volatile than Western Sierra Mining. It trades about -0.17 of its potential returns per unit of risk. Western Sierra Mining is currently generating about -0.33 per unit of risk. If you would invest 4.80 in 4Front Ventures Corp on September 13, 2024 and sell it today you would lose (3.28) from holding 4Front Ventures Corp or give up 68.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
4Front Ventures Corp vs. Western Sierra Mining
Performance |
| Timeline |
| 4Front Ventures Corp |
| Western Sierra Mining |
4Front Ventures and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 4Front Ventures and Western Sierra
The main advantage of trading using opposite 4Front Ventures and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4Front Ventures position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| 4Front Ventures vs. Khiron Life Sciences | 4Front Ventures vs. BellRock Brands | 4Front Ventures vs. Elixinol Global |
| Western Sierra vs. 4Front Ventures Corp | Western Sierra vs. Khiron Life Sciences | Western Sierra vs. BellRock Brands | Western Sierra vs. Elixinol Global |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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