Correlation Between Flora Growth and Sight Sciences
Can any of the company-specific risk be diversified away by investing in both Flora Growth and Sight Sciences 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 Sight Sciences 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 Sight Sciences, you can compare the effects of market volatilities on Flora Growth and Sight Sciences 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 Sight Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and Sight Sciences.
Diversification Opportunities for Flora Growth and Sight Sciences
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Flora and Sight is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and Sight Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sight Sciences 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 Sight Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sight Sciences has no effect on the direction of Flora Growth i.e., Flora Growth and Sight Sciences go up and down completely randomly.
Pair Corralation between Flora Growth and Sight Sciences
Given the investment horizon of 90 days Flora Growth Corp is expected to under-perform the Sight Sciences. In addition to that, Flora Growth is 1.29 times more volatile than Sight Sciences. It trades about -0.01 of its total potential returns per unit of risk. Sight Sciences is currently generating about -0.01 per unit of volatility. If you would invest 1,050 in Sight Sciences on November 26, 2024 and sell it today you would lose (804.00) from holding Sight Sciences or give up 76.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Flora Growth Corp vs. Sight Sciences
Performance |
Timeline |
Flora Growth Corp |
Sight Sciences |
Flora Growth and Sight Sciences Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Flora Growth and Sight Sciences
The main advantage of trading using opposite Flora Growth and Sight Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flora Growth position performs unexpectedly, Sight Sciences 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 Sight Sciences will offset losses from the drop in Sight Sciences' long position.Flora Growth vs. Clever Leaves Holdings | ||
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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