Correlation Between OrganiGram Holdings and Charlottes Web

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

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

Diversification Opportunities for OrganiGram Holdings and Charlottes Web

0.51

Correlation Coefficient

OrganiGram Holdings  Charlottes Web

Very weak diversification

The 3 months correlation between OrganiGram and Charlottes is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding OrganiGram Holdings and Charlottes Web Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlottes Web Holdings and OrganiGram Holdings 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 OrganiGram Holdings are associated (or correlated) with Charlottes Web. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlottes Web Holdings has no effect on the direction of OrganiGram Holdings i.e., OrganiGram Holdings and Charlottes Web go up and down completely randomly.

Pair Corralation between OrganiGram Holdings and Charlottes Web

Assuming the 90 days trading horizon OrganiGram Holdings is expected to under-perform the Charlottes Web. But the stock apears to be less risky and, when comparing its historical volatility, OrganiGram Holdings is 1.63 times less risky than Charlottes Web. The stock trades about -0.08 of its potential returns per unit of risk. The Charlottes Web Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Charlottes Web Holdings on September 14, 2024 and sell it today you would lose (4.00) from holding Charlottes Web Holdings or give up 20.0% of portfolio value over 90 days.

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

OrganiGram Holdings  vs.  Charlottes Web Holdings

OrganiGram Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OrganiGram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Charlottes Web Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charlottes Web Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with OrganiGram Holdings and Charlottes Web

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

The idea behind OrganiGram Holdings and Charlottes Web 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.