Correlation Between Flora Growth and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Flora Growth and Dow Jones 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 Flora Growth and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flora Growth Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Flora Growth and Dow Jones 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 Flora Growth with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and Dow Jones.
Diversification Opportunities for Flora Growth and Dow Jones
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flora and Dow is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Flora Growth 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 Flora Growth Corp are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Flora Growth i.e., Flora Growth and Dow Jones go up and down completely randomly.
Pair Corralation between Flora Growth and Dow Jones
Given the investment horizon of 90 days Flora Growth Corp is expected to generate 10.95 times more return on investment than Dow Jones. However, Flora Growth is 10.95 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 115.00 in Flora Growth Corp on August 26, 2024 and sell it today you would earn a total of 28.00 from holding Flora Growth Corp or generate 24.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flora Growth Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Flora Growth and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Flora Growth Corp
Pair trading matchups for Flora Growth
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Flora Growth and Dow Jones
The main advantage of trading using opposite Flora Growth and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flora Growth position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Flora Growth vs. Clever Leaves Holdings | Flora Growth vs. Painreform | Flora Growth vs. INC Research Holdings | Flora Growth vs. Lowell Farms |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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