Correlation Between Flora Growth and X4 Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Flora Growth and X4 Pharmaceuticals 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 X4 Pharmaceuticals 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 X4 Pharmaceuticals, you can compare the effects of market volatilities on Flora Growth and X4 Pharmaceuticals 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 X4 Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and X4 Pharmaceuticals.
Diversification Opportunities for Flora Growth and X4 Pharmaceuticals
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flora and XFOR is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and X4 Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X4 Pharmaceuticals 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 X4 Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X4 Pharmaceuticals has no effect on the direction of Flora Growth i.e., Flora Growth and X4 Pharmaceuticals go up and down completely randomly.
Pair Corralation between Flora Growth and X4 Pharmaceuticals
Given the investment horizon of 90 days Flora Growth is expected to generate 1.12 times less return on investment than X4 Pharmaceuticals. But when comparing it to its historical volatility, Flora Growth Corp is 2.71 times less risky than X4 Pharmaceuticals. It trades about 0.37 of its potential returns per unit of risk. X4 Pharmaceuticals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 59.00 in X4 Pharmaceuticals on September 13, 2024 and sell it today you would earn a total of 14.00 from holding X4 Pharmaceuticals or generate 23.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Flora Growth Corp vs. X4 Pharmaceuticals
Performance |
Timeline |
Flora Growth Corp |
X4 Pharmaceuticals |
Flora Growth and X4 Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Flora Growth and X4 Pharmaceuticals
The main advantage of trading using opposite Flora Growth and X4 Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flora Growth position performs unexpectedly, X4 Pharmaceuticals 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 X4 Pharmaceuticals will offset losses from the drop in X4 Pharmaceuticals' 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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