Correlation Between Canopy Growth and MPX International

Can any of the company-specific risk be diversified away by investing in both Canopy Growth and MPX International 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 MPX International 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 MPX International Corp, you can compare the effects of market volatilities on Canopy Growth and MPX International 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 MPX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and MPX International.

Diversification Opportunities for Canopy Growth and MPX International

-0.3

Correlation Coefficient

Canopy Growth  MPX International

Very good diversification

The 3 months correlation between Canopy and MPX is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and MPX International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPX International 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 MPX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPX International Corp has no effect on the direction of Canopy Growth i.e., Canopy Growth and MPX International go up and down completely randomly.

Pair Corralation between Canopy Growth and MPX International

Considering the 90-day investment horizon Canopy Growth Corp is expected to under-perform the MPX International. But the stock apears to be less risky and, when comparing its historical volatility, Canopy Growth Corp is 34.13 times less risky than MPX International. The stock trades about -0.08 of its potential returns per unit of risk. The MPX International Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  0.01  in MPX International Corp on October 8, 2024 and sell it today you would earn a total of  0.09  from holding MPX International Corp or generate 900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Canopy Growth Corp  vs.  MPX International Corp

Canopy Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canopy Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MPX International Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MPX International Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MPX International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canopy Growth and MPX International

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

The idea behind Canopy Growth Corp and MPX International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.