Correlation Between Flower One and Heritage Cannabis

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

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

Diversification Opportunities for Flower One and Heritage Cannabis

0.0

Correlation Coefficient

Flower One  Heritage Cannabis

Pay attention - limited upside

The 3 months correlation between Flower and Heritage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Flower One Holdings and Heritage Cannabis Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Cannabis and Flower One 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 Flower One Holdings are associated (or correlated) with Heritage Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Cannabis has no effect on the direction of Flower One i.e., Flower One and Heritage Cannabis go up and down completely randomly.

Pair Corralation between Flower One and Heritage Cannabis

If you would invest  1.07  in Heritage Cannabis Holdings on October 9, 2024 and sell it today you would lose (0.93) from holding Heritage Cannabis Holdings or give up 86.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	63.97%
Values	Daily Returns

Flower One Holdings  vs.  Heritage Cannabis Holdings

Flower One Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Heritage Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Flower One and Heritage Cannabis

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

The idea behind Flower One Holdings and Heritage Cannabis Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.