Correlation Between Stem Holdings and Flora Growth
Can any of the company-specific risk be diversified away by investing in both Stem Holdings and Flora Growth 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 Stem Holdings and Flora Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stem Holdings and Flora Growth Corp, you can compare the effects of market volatilities on Stem Holdings and Flora Growth 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 Stem Holdings with a short position of Flora Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem Holdings and Flora Growth.
Diversification Opportunities for Stem Holdings and Flora Growth
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stem and Flora is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Stem Holdings and Flora Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flora Growth Corp and Stem 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 Stem Holdings are associated (or correlated) with Flora Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flora Growth Corp has no effect on the direction of Stem Holdings i.e., Stem Holdings and Flora Growth go up and down completely randomly.
Pair Corralation between Stem Holdings and Flora Growth
Given the investment horizon of 90 days Stem Holdings is expected to generate 6.59 times more return on investment than Flora Growth. However, Stem Holdings is 6.59 times more volatile than Flora Growth Corp. It trades about 0.06 of its potential returns per unit of risk. Flora Growth Corp is currently generating about -0.02 per unit of risk. If you would invest 2.00 in Stem Holdings on November 2, 2024 and sell it today you would lose (2.00) from holding Stem Holdings or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Stem Holdings vs. Flora Growth Corp
Performance |
| Timeline |
| Stem Holdings |
| Flora Growth Corp |
Stem Holdings and Flora Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stem Holdings and Flora Growth
The main advantage of trading using opposite Stem Holdings and Flora Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem Holdings position performs unexpectedly, Flora Growth 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 Flora Growth will offset losses from the drop in Flora Growth's long position.| Stem Holdings vs. Delta 9 Cannabis | Stem Holdings vs. Body and Mind | Stem Holdings vs. CLS Holdings USA | Stem Holdings vs. Halo Collective |
| Flora Growth vs. Clever Leaves Holdings | Flora Growth vs. Painreform | Flora Growth vs. INC Research Holdings | Flora Growth vs. Lowell Farms |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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