Correlation Between Greater Cannabis and Leef Brands

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

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

Diversification Opportunities for Greater Cannabis and Leef Brands

0.19

Correlation Coefficient

Greater Cannabis  Leef Brands

Average diversification

The 3 months correlation between Greater and Leef is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands and Greater Cannabis 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 Greater Cannabis are associated (or correlated) with Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Leef Brands go up and down completely randomly.

Pair Corralation between Greater Cannabis and Leef Brands

Given the investment horizon of 90 days Greater Cannabis is expected to generate 2.0 times more return on investment than Leef Brands. However, Greater Cannabis is 2.0 times more volatile than Leef Brands. It trades about 0.13 of its potential returns per unit of risk. Leef Brands is currently generating about -0.04 per unit of risk. If you would invest  0.04  in Greater Cannabis on December 29, 2024 and sell it today you would earn a total of  0.03  from holding Greater Cannabis or generate 75.0% return on investment over 90 days.

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

Greater Cannabis  vs.  Leef Brands

Greater Cannabis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greater Cannabis are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Greater Cannabis displayed solid returns over the last few months and may actually be approaching a breakup point.

Leef Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leef Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Greater Cannabis and Leef Brands

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

The idea behind Greater Cannabis and Leef Brands 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.