Correlation Between Canopy Growth and Curaleaf Holdings

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

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

Diversification Opportunities for Canopy Growth and Curaleaf Holdings

-0.41

Correlation Coefficient

Canopy Growth  Curaleaf Holdings

Very good diversification

The 3 months correlation between Canopy and Curaleaf is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and Curaleaf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curaleaf Holdings and Canopy Growth 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 Canopy Growth Corp are associated (or correlated) with Curaleaf Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curaleaf Holdings has no effect on the direction of Canopy Growth i.e., Canopy Growth and Curaleaf Holdings go up and down completely randomly.

Pair Corralation between Canopy Growth and Curaleaf Holdings

Considering the 90-day investment horizon Canopy Growth Corp is expected to under-perform the Curaleaf Holdings. In addition to that, Canopy Growth is 1.09 times more volatile than Curaleaf Holdings. It trades about -0.01 of its total potential returns per unit of risk. Curaleaf Holdings is currently generating about 0.08 per unit of volatility. If you would invest  97.00  in Curaleaf Holdings on April 24, 2025 and sell it today you would earn a total of  20.00  from holding Curaleaf Holdings or generate 20.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Canopy Growth Corp  vs.  Curaleaf Holdings

Canopy Growth Corp

Risk-Adjusted Performance

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 rather sound technical and fundamental indicators, Canopy Growth is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Curaleaf Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Curaleaf Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Curaleaf Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canopy Growth and Curaleaf Holdings

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

The idea behind Canopy Growth Corp and Curaleaf Holdings 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.