Breaking down Canopy (NASDAQ:CGC) volatility
 | By Vlad Skutelnik | Macroaxis Story |
Considering the 90-day investment horizon Canopy Growth is expected to generate 6.43 times more return on investment than the market. However, the company is 6.43 times more volatile than its market benchmark. It trades about 0.13 of its potential returns per unit of risk. The DOW is currently generating roughly -0.05 per unit of risk. While some risk-loving traders are indifferent towards current market volatility, it is reasonable to go over the risk of investing in Canopy Growth Corp. We are going to analyze if the current expected returns justify Canopy Growth's volatility. The current Canopy risk factors may impact the value of the stock as we estimate Canopy Growth as currently undervalued. The real value is approaching 5.49 per share.
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Reviewed by Ellen Johnson
The company runs under Healthcare sector within Drug Manufacturers—Specialty & Generic industry.
Canopy Growth holds a performance score of 10 on a scale of zero to a hundred. The firm shows a Beta (market volatility) of 2.0674, which signifies a somewhat significant risk relative to the market. Let's try to break down what Canopy's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, Canopy Growth will likely underperform. Although it is vital to follow Canopy Growth Corp historical returns, it is good to be conservative about what you can do with the information regarding equity current trending patterns. Our philosophy towards foreseeing future performance of any stock is to look not only at its past charts but also at the business as a whole, including all fundamental and technical indicators. To evaluate if Canopy Growth Corp expected return of 1.08 will be sustainable into the future, we have found twenty-one different technical indicators, which can help you to check if the expected returns are sustainable. Use Canopy Growth maximum drawdown, semi variance, and the relationship between the jensen alpha and potential upside to analyze future returns on Canopy Growth.
Volatility is a rate at which the price of Canopy Growth or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Canopy Growth may increase or decrease. In other words, similar to Canopy's beta indicator, it measures the risk of Canopy Growth and helps estimate the fluctuations that may happen in a short period of time. So if prices of Canopy Growth fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page. 
How important is Canopy Growth's Liquidity
Canopy Growth financial leverage refers to using borrowed capital as a funding source to finance Canopy Growth Corp ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Canopy Growth financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Canopy Growth's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Canopy Growth's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Canopy Growth's total debt and its cash.
Canopy Growth Gross Profit
Canopy Growth Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Canopy Growth previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Canopy Growth Gross Profit growth over the last 10 years. Please check Canopy Growth's gross profit and other fundamental indicators for more details.
Canopy Growth Volatility Drivers
Canopy Growth unsystematic risk is unique to Canopy Growth Corp and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Canopy Growth you can also buy PetIQ Inc. You can also mitigate this risk by investing in the health care sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Canopy Growth important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Canopy Growth income statement and balance sheet. Here are more details about Canopy volatility.Click cells to compare fundamentals
What is driving Canopy Growth Investor Appetite?
Canopy Growth Corp reported the last year's revenue of 520.32 M. Reported Net Loss for the year was (302.18 M) with loss before taxes, overhead, and interest of (81.94 M).
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