Correlation Between Cronos and Charlottes Web

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

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

Diversification Opportunities for Cronos and Charlottes Web

0.18

Correlation Coefficient

Cronos  Charlottes Web

Average diversification

The 3 months correlation between Cronos and Charlottes is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cronos Group and Charlottes Web Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlottes Web Holdings and Cronos 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 Cronos Group are associated (or correlated) with Charlottes Web. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlottes Web Holdings has no effect on the direction of Cronos i.e., Cronos and Charlottes Web go up and down completely randomly.

Pair Corralation between Cronos and Charlottes Web

Assuming the 90 days trading horizon Cronos Group is expected to generate 0.32 times more return on investment than Charlottes Web. However, Cronos Group is 3.16 times less risky than Charlottes Web. It trades about 0.12 of its potential returns per unit of risk. Charlottes Web Holdings is currently generating about 0.03 per unit of risk. If you would invest  238.00  in Cronos Group on April 21, 2025 and sell it today you would earn a total of  37.00  from holding Cronos Group or generate 15.55% return on investment over 90 days.

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

Cronos Group  vs.  Charlottes Web Holdings

Cronos Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cronos Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cronos displayed solid returns over the last few months and may actually be approaching a breakup point.

Charlottes Web Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Charlottes Web Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Charlottes Web displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cronos and Charlottes Web

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

The idea behind Cronos Group and Charlottes Web 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.