Correlation Between Canopy Growth and Harvest Tech

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

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

Diversification Opportunities for Canopy Growth and Harvest Tech

-0.49

Correlation Coefficient

Canopy Growth  Harvest Tech

Very good diversification

The 3 months correlation between Canopy and Harvest is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and Harvest Tech Achievers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Tech Achievers and Canopy Growth 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 Canopy Growth Corp are associated (or correlated) with Harvest Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Tech Achievers has no effect on the direction of Canopy Growth i.e., Canopy Growth and Harvest Tech go up and down completely randomly.

Pair Corralation between Canopy Growth and Harvest Tech

Assuming the 90 days trading horizon Canopy Growth is expected to generate 1.14 times less return on investment than Harvest Tech. In addition to that, Canopy Growth is 6.05 times more volatile than Harvest Tech Achievers. It trades about 0.02 of its total potential returns per unit of risk. Harvest Tech Achievers is currently generating about 0.12 per unit of volatility. If you would invest  1,073  in Harvest Tech Achievers on September 21, 2024 and sell it today you would earn a total of  652.00  from holding Harvest Tech Achievers or generate 60.76% return on investment over 90 days.

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

Canopy Growth Corp  vs.  Harvest Tech Achievers

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 unfluctuating 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.

Harvest Tech Achievers

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Tech Achievers are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Harvest Tech is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Canopy Growth and Harvest Tech

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

The idea behind Canopy Growth Corp and Harvest Tech Achievers 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.