Correlation Between Charlottes Web and Apple

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

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

Diversification Opportunities for Charlottes Web and Apple

0.09

Correlation Coefficient

Charlottes Web  Apple

Significant diversification

The 3 months correlation between Charlottes and Apple is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Charlottes Web Holdings and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and Charlottes Web 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 Charlottes Web Holdings are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Charlottes Web i.e., Charlottes Web and Apple go up and down completely randomly.

Pair Corralation between Charlottes Web and Apple

Assuming the 90 days trading horizon Charlottes Web Holdings is expected to generate 3.74 times more return on investment than Apple. However, Charlottes Web is 3.74 times more volatile than Apple Inc CDR. It trades about 0.07 of its potential returns per unit of risk. Apple Inc CDR is currently generating about -0.14 per unit of risk. If you would invest  12.00  in Charlottes Web Holdings on December 25, 2024 and sell it today you would earn a total of  2.00  from holding Charlottes Web Holdings or generate 16.67% return on investment over 90 days.

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

Charlottes Web Holdings  vs.  Apple Inc CDR

Charlottes Web Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charlottes Web Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Charlottes Web displayed solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc CDR

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Charlottes Web and Apple

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

The idea behind Charlottes Web Holdings and Apple Inc CDR 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.