Correlation Between Pacira BioSciences, and Cresco Labs

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

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

Diversification Opportunities for Pacira BioSciences, and Cresco Labs

0.02

Correlation Coefficient

Pacira BioSciences,  Cresco Labs

Significant diversification

The 3 months correlation between Pacira and Cresco is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pacira BioSciences, and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs and Pacira BioSciences, 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 Pacira BioSciences, are associated (or correlated) with Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Pacira BioSciences, i.e., Pacira BioSciences, and Cresco Labs go up and down completely randomly.

Pair Corralation between Pacira BioSciences, and Cresco Labs

Given the investment horizon of 90 days Pacira BioSciences, is expected to generate 0.53 times more return on investment than Cresco Labs. However, Pacira BioSciences, is 1.9 times less risky than Cresco Labs. It trades about 0.18 of its potential returns per unit of risk. Cresco Labs is currently generating about 0.0 per unit of risk. If you would invest  1,894  in Pacira BioSciences, on December 28, 2024 and sell it today you would earn a total of  636.00  from holding Pacira BioSciences, or generate 33.58% return on investment over 90 days.

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

Pacira BioSciences,  vs.  Cresco Labs

Pacira BioSciences,

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacira BioSciences, are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Pacira BioSciences, showed solid returns over the last few months and may actually be approaching a breakup point.

Cresco Labs

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Pacira BioSciences, and Cresco Labs

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

The idea behind Pacira BioSciences, and Cresco Labs 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.