Correlation Between Nova Cannabis and Leafly Holdings
Can any of the company-specific risk be diversified away by investing in both Nova Cannabis and Leafly Holdings 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 Nova Cannabis and Leafly Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Cannabis and Leafly Holdings, you can compare the effects of market volatilities on Nova Cannabis and Leafly Holdings 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 Nova Cannabis with a short position of Leafly Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Cannabis and Leafly Holdings.
Diversification Opportunities for Nova Cannabis and Leafly Holdings
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nova and Leafly is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nova Cannabis and Leafly Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leafly Holdings and Nova Cannabis 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 Nova Cannabis are associated (or correlated) with Leafly Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leafly Holdings has no effect on the direction of Nova Cannabis i.e., Nova Cannabis and Leafly Holdings go up and down completely randomly.
Pair Corralation between Nova Cannabis and Leafly Holdings
Assuming the 90 days horizon Nova Cannabis is expected to generate 0.66 times more return on investment than Leafly Holdings. However, Nova Cannabis is 1.51 times less risky than Leafly Holdings. It trades about 0.05 of its potential returns per unit of risk. Leafly Holdings is currently generating about -0.02 per unit of risk. If you would invest 73.00 in Nova Cannabis on August 31, 2024 and sell it today you would earn a total of 53.00 from holding Nova Cannabis or generate 72.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.55% |
| Values | Daily Returns |
Nova Cannabis vs. Leafly Holdings
Performance |
| Timeline |
| Nova Cannabis |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Leafly Holdings |
Nova Cannabis and Leafly Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Cannabis and Leafly Holdings
The main advantage of trading using opposite Nova Cannabis and Leafly Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Cannabis position performs unexpectedly, Leafly Holdings 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 Leafly Holdings will offset losses from the drop in Leafly Holdings' long position.| Nova Cannabis vs. Leafly Holdings | Nova Cannabis vs. Leafly Holdings | Nova Cannabis vs. SunLink Health Systems | Nova Cannabis vs. Kiaro Holdings Corp |
| Leafly Holdings vs. Kiaro Holdings Corp | Leafly Holdings vs. Allstar Health Brands | Leafly Holdings vs. China Jo Jo Drugstores |
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 Directory module to find actively traded commodities issued by global exchanges.
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