Correlation Between Curaleaf Holdings and Cresco Labs

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

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

Diversification Opportunities for Curaleaf Holdings and Cresco Labs

0.77

Correlation Coefficient

Curaleaf Holdings  Cresco Labs

Poor diversification

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

Pair Corralation between Curaleaf Holdings and Cresco Labs

Assuming the 90 days horizon Curaleaf Holdings is expected to under-perform the Cresco Labs. But the otc stock apears to be less risky and, when comparing its historical volatility, Curaleaf Holdings is 1.02 times less risky than Cresco Labs. The otc stock trades about -0.1 of its potential returns per unit of risk. The Cresco Labs is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Cresco Labs on December 30, 2024 and sell it today you would lose (5.00) from holding Cresco Labs or give up 6.02% 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.  Cresco Labs

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.

Cresco Labs

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Curaleaf Holdings and Cresco Labs

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

The idea behind Curaleaf Holdings and Cresco Labs 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.