Correlation Between Leafly Holdings and Nova Cannabis
Can any of the company-specific risk be diversified away by investing in both Leafly Holdings and Nova Cannabis 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 Leafly Holdings and Nova Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leafly Holdings and Nova Cannabis, you can compare the effects of market volatilities on Leafly Holdings and Nova Cannabis 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 Leafly Holdings with a short position of Nova Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leafly Holdings and Nova Cannabis.
Diversification Opportunities for Leafly Holdings and Nova Cannabis
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leafly and Nova is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Leafly Holdings and Nova Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Cannabis and Leafly Holdings 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 Leafly Holdings are associated (or correlated) with Nova Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Cannabis has no effect on the direction of Leafly Holdings i.e., Leafly Holdings and Nova Cannabis go up and down completely randomly.
Pair Corralation between Leafly Holdings and Nova Cannabis
Assuming the 90 days horizon Leafly Holdings is expected to generate 81.79 times more return on investment than Nova Cannabis. However, Leafly Holdings is 81.79 times more volatile than Nova Cannabis. It trades about 0.07 of its potential returns per unit of risk. Nova Cannabis is currently generating about -0.06 per unit of risk. If you would invest 1.96 in Leafly Holdings on November 2, 2024 and sell it today you would lose (0.86) from holding Leafly Holdings or give up 43.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 38.95% |
| Values | Daily Returns |
Leafly Holdings vs. Nova Cannabis
Performance |
| Timeline |
| Leafly Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nova Cannabis |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Leafly Holdings and Nova Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leafly Holdings and Nova Cannabis
The main advantage of trading using opposite Leafly Holdings and Nova Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leafly Holdings position performs unexpectedly, Nova Cannabis 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 Nova Cannabis will offset losses from the drop in Nova Cannabis' long position.| Leafly Holdings vs. WM Technology | Leafly Holdings vs. Revelation Biosciences | Leafly Holdings vs. AEye Inc |
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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