Correlation Between Canopy Growth and Embecta Corp
Can any of the company-specific risk be diversified away by investing in both Canopy Growth and Embecta Corp 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 Canopy Growth and Embecta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canopy Growth Corp and Embecta Corp, you can compare the effects of market volatilities on Canopy Growth and Embecta Corp 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 Canopy Growth with a short position of Embecta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and Embecta Corp.
Diversification Opportunities for Canopy Growth and Embecta Corp
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canopy and Embecta is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and Embecta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embecta Corp and Canopy 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 Canopy Growth Corp are associated (or correlated) with Embecta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embecta Corp has no effect on the direction of Canopy Growth i.e., Canopy Growth and Embecta Corp go up and down completely randomly.
Pair Corralation between Canopy Growth and Embecta Corp
Considering the 90-day investment horizon Canopy Growth Corp is expected to generate 3.03 times more return on investment than Embecta Corp. However, Canopy Growth is 3.03 times more volatile than Embecta Corp. It trades about 0.16 of its potential returns per unit of risk. Embecta Corp is currently generating about 0.0 per unit of risk. If you would invest 297.00 in Canopy Growth Corp on March 7, 2024 and sell it today you would earn a total of 484.00 from holding Canopy Growth Corp or generate 162.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Canopy Growth Corp vs. Embecta Corp
Performance |
Timeline |
Canopy Growth Corp |
Embecta Corp |
Canopy Growth and Embecta Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canopy Growth and Embecta Corp
The main advantage of trading using opposite Canopy Growth and Embecta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canopy Growth position performs unexpectedly, Embecta Corp 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 Embecta Corp will offset losses from the drop in Embecta Corp's long position.Canopy Growth vs. China SXT Pharmaceuticals | Canopy Growth vs. Petros Pharmaceuticals | Canopy Growth vs. GelStat Corp | Canopy Growth vs. Decibel Cannabis |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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