Correlation Between Willow Biosciences and C21 Investments

Can any of the company-specific risk be diversified away by investing in both Willow Biosciences and C21 Investments 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 Willow Biosciences and C21 Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Willow Biosciences and C21 Investments, you can compare the effects of market volatilities on Willow Biosciences and C21 Investments 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 Willow Biosciences with a short position of C21 Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willow Biosciences and C21 Investments.

Diversification Opportunities for Willow Biosciences and C21 Investments

0.46

Correlation Coefficient

Willow Biosciences  C21 Investments

Very weak diversification

The 3 months correlation between Willow and C21 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Willow Biosciences and C21 Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C21 Investments and Willow Biosciences 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 Willow Biosciences are associated (or correlated) with C21 Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C21 Investments has no effect on the direction of Willow Biosciences i.e., Willow Biosciences and C21 Investments go up and down completely randomly.

Pair Corralation between Willow Biosciences and C21 Investments

Assuming the 90 days horizon Willow Biosciences is expected to generate 3.82 times less return on investment than C21 Investments. But when comparing it to its historical volatility, Willow Biosciences is 1.34 times less risky than C21 Investments. It trades about 0.01 of its potential returns per unit of risk. C21 Investments is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  25.00  in C21 Investments on September 4, 2024 and sell it today you would lose (2.00) from holding C21 Investments or give up 8.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Willow Biosciences  vs.  C21 Investments

Willow Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willow Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Willow Biosciences is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

C21 Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C21 Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, C21 Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Willow Biosciences and C21 Investments

The main advantage of trading using opposite Willow Biosciences and C21 Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willow Biosciences position performs unexpectedly, C21 Investments 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 C21 Investments will offset losses from the drop in C21 Investments' long position.

The idea behind Willow Biosciences and C21 Investments 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.