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
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nova and Leafly is 0.0. 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
If you would invest (100.00) in Leafly Holdings on November 9, 2024 and sell it today you would earn a total of 100.00 from holding Leafly Holdings or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Cannabis vs. Leafly Holdings
Performance |
| Timeline |
| Nova Cannabis |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Leafly Holdings |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
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.The idea behind Nova Cannabis and Leafly Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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