Correlation Between Curaleaf Holdings and Ascend Wellness

Can any of the company-specific risk be diversified away by investing in both Curaleaf Holdings and Ascend Wellness 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 Curaleaf Holdings and Ascend Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Curaleaf Holdings and Ascend Wellness

0.77

Correlation Coefficient

Curaleaf Holdings  Ascend Wellness

Poor diversification

The 3 months correlation between Curaleaf and Ascend is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Curaleaf Holdings and Ascend Wellness Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascend Wellness Holdings and Curaleaf Holdings 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 Curaleaf Holdings are associated (or correlated) with Ascend Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascend Wellness Holdings has no effect on the direction of Curaleaf Holdings i.e., Curaleaf Holdings and Ascend Wellness go up and down completely randomly.

Pair Corralation between Curaleaf Holdings and Ascend Wellness

Assuming the 90 days horizon Curaleaf Holdings is expected to under-perform the Ascend Wellness. In addition to that, Curaleaf Holdings is 1.01 times more volatile than Ascend Wellness Holdings. It trades about -0.14 of its total potential returns per unit of risk. Ascend Wellness Holdings is currently generating about 0.02 per unit of volatility. If you would invest  39.00  in Ascend Wellness Holdings on December 22, 2024 and sell it today you would lose (1.00) from holding Ascend Wellness Holdings or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Curaleaf Holdings  vs.  Ascend Wellness Holdings

Curaleaf Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Curaleaf Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ascend Wellness Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascend Wellness Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Ascend Wellness is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Curaleaf Holdings and Ascend Wellness

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

The idea behind Curaleaf Holdings and Ascend Wellness Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.