Correlation Between CV Sciences and Pure Harvest

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

By analyzing existing cross correlation between CV Sciences and Pure Harvest Cannabis, you can compare the effects of market volatilities on CV Sciences and Pure Harvest 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 CV Sciences with a short position of Pure Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of CV Sciences and Pure Harvest.

Diversification Opportunities for CV Sciences and Pure Harvest

-0.11

Correlation Coefficient

CV Sciences  Pure Harvest

Good diversification

The 3 months correlation between CVSI and Pure is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CV Sciences and Pure Harvest Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Harvest Cannabis and CV Sciences 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 CV Sciences are associated (or correlated) with Pure Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Harvest Cannabis has no effect on the direction of CV Sciences i.e., CV Sciences and Pure Harvest go up and down completely randomly.

Pair Corralation between CV Sciences and Pure Harvest

Given the investment horizon of 90 days CV Sciences is expected to generate 3.5 times less return on investment than Pure Harvest. But when comparing it to its historical volatility, CV Sciences is 1.44 times less risky than Pure Harvest. It trades about 0.04 of its potential returns per unit of risk. Pure Harvest Cannabis is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Pure Harvest Cannabis on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Pure Harvest Cannabis or generate 0.0% return on investment over 90 days.

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

CV Sciences  vs.  Pure Harvest Cannabis

CV Sciences

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CV Sciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CV Sciences demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pure Harvest Cannabis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Harvest Cannabis are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Pure Harvest reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CV Sciences and Pure Harvest

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

The idea behind CV Sciences and Pure Harvest Cannabis 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.