Correlation Between Columbia Care and Lowell Farms

Can any of the company-specific risk be diversified away by investing in both Columbia Care and Lowell Farms 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 Columbia Care and Lowell Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Columbia Care and Lowell Farms

0.14

Correlation Coefficient

Columbia Care  Lowell Farms

Average diversification

The 3 months correlation between Columbia and Lowell is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Care and Lowell Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowell Farms and Columbia Care 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 Columbia Care are associated (or correlated) with Lowell Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowell Farms has no effect on the direction of Columbia Care i.e., Columbia Care and Lowell Farms go up and down completely randomly.

Pair Corralation between Columbia Care and Lowell Farms

If you would invest  1.00  in Lowell Farms on September 4, 2024 and sell it today you would earn a total of  0.80  from holding Lowell Farms or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Columbia Care  vs.  Lowell Farms

Columbia Care

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lowell Farms

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lowell Farms are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Lowell Farms reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Care and Lowell Farms

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

The idea behind Columbia Care and Lowell Farms 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.