Correlation Between 4Front Ventures and Earth Science

Can any of the company-specific risk be diversified away by investing in both 4Front Ventures and Earth Science 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 4Front Ventures and Earth Science into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4Front Ventures Corp and Earth Science Tech, you can compare the effects of market volatilities on 4Front Ventures and Earth Science 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 4Front Ventures with a short position of Earth Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4Front Ventures and Earth Science.

Diversification Opportunities for 4Front Ventures and Earth Science

-0.47

Correlation Coefficient

4Front Ventures  Earth Science

Very good diversification

The 3 months correlation between 4Front and Earth is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding 4Front Ventures Corp and Earth Science Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earth Science Tech and 4Front Ventures 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 4Front Ventures Corp are associated (or correlated) with Earth Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earth Science Tech has no effect on the direction of 4Front Ventures i.e., 4Front Ventures and Earth Science go up and down completely randomly.

Pair Corralation between 4Front Ventures and Earth Science

Assuming the 90 days horizon 4Front Ventures is expected to generate 2.84 times less return on investment than Earth Science. In addition to that, 4Front Ventures is 1.14 times more volatile than Earth Science Tech. It trades about 0.03 of its total potential returns per unit of risk. Earth Science Tech is currently generating about 0.09 per unit of volatility. If you would invest  7.00  in Earth Science Tech on December 2, 2024 and sell it today you would earn a total of  10.00  from holding Earth Science Tech or generate 142.86% return on investment over 90 days.

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

4Front Ventures Corp  vs.  Earth Science Tech

4Front Ventures Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 4Front Ventures Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, 4Front Ventures reported solid returns over the last few months and may actually be approaching a breakup point.

Earth Science Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Earth Science Tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Earth Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 4Front Ventures and Earth Science

The main advantage of trading using opposite 4Front Ventures and Earth Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4Front Ventures position performs unexpectedly, Earth Science 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 Earth Science will offset losses from the drop in Earth Science's long position.

The idea behind 4Front Ventures Corp and Earth Science Tech 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.