Correlation Between Lowell Farms and Delta 9

Can any of the company-specific risk be diversified away by investing in both Lowell Farms and Delta 9 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 Delta 9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lowell Farms and Delta 9 Cannabis, you can compare the effects of market volatilities on Lowell Farms and Delta 9 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 Delta 9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowell Farms and Delta 9.

Diversification Opportunities for Lowell Farms and Delta 9

0.0

Correlation Coefficient

Lowell Farms  Delta 9

Pay attention - limited upside

The 3 months correlation between Lowell and Delta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lowell Farms and Delta 9 Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta 9 Cannabis 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 Delta 9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta 9 Cannabis has no effect on the direction of Lowell Farms i.e., Lowell Farms and Delta 9 go up and down completely randomly.

Pair Corralation between Lowell Farms and Delta 9

Assuming the 90 days horizon Lowell Farms is expected to generate 1.64 times more return on investment than Delta 9. However, Lowell Farms is 1.64 times more volatile than Delta 9 Cannabis. It trades about 0.04 of its potential returns per unit of risk. Delta 9 Cannabis is currently generating about 0.01 per unit of risk. If you would invest  95.00  in Lowell Farms on September 20, 2024 and sell it today you would lose (93.70) from holding Lowell Farms or give up 98.63% of portfolio value over 90 days.

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

Lowell Farms  vs.  Delta 9 Cannabis

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 weak essential indicators, Lowell Farms reported solid returns over the last few months and may actually be approaching a breakup point.

Delta 9 Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta 9 Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Delta 9 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 Delta 9

The main advantage of trading using opposite Lowell Farms and Delta 9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowell Farms position performs unexpectedly, Delta 9 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 Delta 9 will offset losses from the drop in Delta 9's long position.

The idea behind Lowell Farms and Delta 9 Cannabis 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.