Correlation Between Stem Holdings and Charlottes Web

Can any of the company-specific risk be diversified away by investing in both Stem 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 Stem 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 Stem Holdings and Charlottes Web Holdings, you can compare the effects of market volatilities on Stem 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 Stem Holdings with a short position of Charlottes Web. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem Holdings and Charlottes Web.

Diversification Opportunities for Stem Holdings and Charlottes Web

0.44

Correlation Coefficient

Stem Holdings  Charlottes Web

Very weak diversification

The 3 months correlation between Stem and Charlottes is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Stem 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 Stem 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 Stem 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 Stem Holdings i.e., Stem Holdings and Charlottes Web go up and down completely randomly.

Pair Corralation between Stem Holdings and Charlottes Web

If you would invest  10.00  in Charlottes Web Holdings on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Charlottes Web Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

Stem Holdings  vs.  Charlottes Web Holdings

Stem Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stem Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Charlottes Web Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Stem Holdings and Charlottes Web

The main advantage of trading using opposite Stem Holdings and Charlottes Web positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem 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 Stem 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.