Correlation Between Lowell Farms and Silver Spike

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

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

Diversification Opportunities for Lowell Farms and Silver Spike

0.61

Correlation Coefficient

Lowell Farms  Silver Spike

Poor diversification

The 3 months correlation between Lowell and Silver is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lowell Farms and Silver Spike Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spike Investment 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 Silver Spike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spike Investment has no effect on the direction of Lowell Farms i.e., Lowell Farms and Silver Spike go up and down completely randomly.

Pair Corralation between Lowell Farms and Silver Spike

Assuming the 90 days horizon Lowell Farms is expected to generate 13.85 times more return on investment than Silver Spike. However, Lowell Farms is 13.85 times more volatile than Silver Spike Investment. It trades about 0.06 of its potential returns per unit of risk. Silver Spike Investment is currently generating about 0.13 per unit of risk. If you would invest  1.80  in Lowell Farms on September 19, 2024 and sell it today you would lose (0.80) from holding Lowell Farms or give up 44.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.54%
Values	Daily Returns

Lowell Farms  vs.  Silver Spike Investment

Lowell Farms

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lowell Farms are ranked lower than 4 (%) 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.

Silver Spike Investment

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lowell Farms and Silver Spike

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

The idea behind Lowell Farms and Silver Spike Investment 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.