Correlation Between Lowell Farms and Columbia Care

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

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

Diversification Opportunities for Lowell Farms and Columbia Care

0.01

Correlation Coefficient

Lowell Farms  Columbia Care

Significant diversification

The 3 months correlation between Lowell and Columbia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lowell Farms and Columbia Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Care and Lowell Farms 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 Lowell Farms are associated (or correlated) with Columbia Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Care has no effect on the direction of Lowell Farms i.e., Lowell Farms and Columbia Care go up and down completely randomly.

Pair Corralation between Lowell Farms and Columbia Care

If you would invest  1.70  in Lowell Farms on September 12, 2024 and sell it today you would lose (0.10) from holding Lowell Farms or give up 5.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Lowell Farms  vs.  Columbia Care

Lowell Farms

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lowell Farms are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Lowell Farms reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Lowell Farms and Columbia Care

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

The idea behind Lowell Farms and Columbia Care 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.