Correlation Between FutureWorld Corp and Canopy Growth

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

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

Diversification Opportunities for FutureWorld Corp and Canopy Growth

0.0

Correlation Coefficient

FutureWorld Corp  Canopy Growth

Pay attention - limited upside

The 3 months correlation between FutureWorld and Canopy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FutureWorld Corp 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 FutureWorld Corp 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 FutureWorld Corp 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 FutureWorld Corp i.e., FutureWorld Corp and Canopy Growth go up and down completely randomly.

Pair Corralation between FutureWorld Corp and Canopy Growth

Given the investment horizon of 90 days FutureWorld Corp is expected to generate 4.75 times more return on investment than Canopy Growth. However, FutureWorld Corp is 4.75 times more volatile than Canopy Growth Corp. It trades about 0.04 of its potential returns per unit of risk. Canopy Growth Corp is currently generating about 0.0 per unit of risk. If you would invest  0.01  in FutureWorld Corp on September 19, 2024 and sell it today you would lose (0.01) from holding FutureWorld Corp or give up 100.0% of portfolio value over 90 days.

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

FutureWorld Corp  vs.  Canopy Growth Corp

FutureWorld Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with FutureWorld Corp and Canopy Growth

The main advantage of trading using opposite FutureWorld Corp and Canopy Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureWorld Corp 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 FutureWorld Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.