Correlation Between Better Plant and Canopy Growth

Can any of the company-specific risk be diversified away by investing in both Better Plant and Canopy Growth 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 Better Plant and Canopy Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Better Plant Sciences and Canopy Growth Corp, you can compare the effects of market volatilities on Better Plant and Canopy Growth 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 Better Plant with a short position of Canopy Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better Plant and Canopy Growth.

Diversification Opportunities for Better Plant and Canopy Growth

0.0

Correlation Coefficient

Better Plant  Canopy Growth

Pay attention - limited upside

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

Pair Corralation between Better Plant and Canopy Growth

If you would invest  1.00  in Better Plant Sciences on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Better Plant Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Better Plant Sciences  vs.  Canopy Growth Corp

Better Plant Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Better Plant Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Better Plant is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Canopy Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canopy Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Better Plant and Canopy Growth

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

The idea behind Better Plant Sciences and Canopy Growth Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.