Correlation Between Curaleaf Holdings and CbdMD

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

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

Diversification Opportunities for Curaleaf Holdings and CbdMD

-0.17

Correlation Coefficient

Curaleaf Holdings  CbdMD

Good diversification

The 3 months correlation between Curaleaf and CbdMD is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Curaleaf Holdings and cbdMD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cbdMD Inc 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 CbdMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cbdMD Inc has no effect on the direction of Curaleaf Holdings i.e., Curaleaf Holdings and CbdMD go up and down completely randomly.

Pair Corralation between Curaleaf Holdings and CbdMD

Assuming the 90 days horizon Curaleaf Holdings is expected to under-perform the CbdMD. But the otc stock apears to be less risky and, when comparing its historical volatility, Curaleaf Holdings is 1.98 times less risky than CbdMD. The otc stock trades about -0.11 of its potential returns per unit of risk. The cbdMD Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  49.00  in cbdMD Inc on November 29, 2024 and sell it today you would lose (9.00) from holding cbdMD Inc or give up 18.37% of portfolio value over 90 days.

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

Curaleaf Holdings  vs.  cbdMD Inc

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 March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

cbdMD Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days cbdMD Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, CbdMD is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Curaleaf Holdings and CbdMD

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

The idea behind Curaleaf Holdings and cbdMD Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.