Correlation Between Flexion Therapeutics and Canopy Growth

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Can any of the company-specific risk be diversified away by investing in both Flexion Therapeutics and Canopy 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 Flexion Therapeutics and Canopy Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexion Therapeutics and Canopy Growth Corp, you can compare the effects of market volatilities on Flexion Therapeutics and Canopy 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 Flexion Therapeutics with a short position of Canopy Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexion Therapeutics and Canopy Growth.

Diversification Opportunities for Flexion Therapeutics and Canopy Growth

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Flexion and Canopy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Flexion Therapeutics and Canopy Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canopy Growth Corp and Flexion Therapeutics 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 Flexion Therapeutics are associated (or correlated) with Canopy Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canopy Growth Corp has no effect on the direction of Flexion Therapeutics i.e., Flexion Therapeutics and Canopy Growth go up and down completely randomly.

Pair Corralation between Flexion Therapeutics and Canopy Growth

If you would invest  353.00  in Canopy Growth Corp on December 29, 2023 and sell it today you would earn a total of  602.00  from holding Canopy Growth Corp or generate 170.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Flexion Therapeutics  vs.  Canopy Growth Corp

 Performance 
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Flexion Therapeutics 

Risk-Adjusted Performance

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Over the last 90 days Flexion Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Flexion Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Canopy Growth Corp 

Risk-Adjusted Performance

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Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Canopy Growth Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Canopy Growth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Flexion Therapeutics and Canopy Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Flexion Therapeutics and Canopy Growth

The main advantage of trading using opposite Flexion Therapeutics and Canopy Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexion Therapeutics position performs unexpectedly, Canopy 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 Canopy Growth will offset losses from the drop in Canopy Growth's long position.
The idea behind Flexion Therapeutics and Canopy Growth Corp 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.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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