Correlation Between Charlottes Web and Cardiol Therapeutics

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

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

Diversification Opportunities for Charlottes Web and Cardiol Therapeutics

0.39

Correlation Coefficient

Charlottes Web  Cardiol Therapeutics

Weak diversification

The 3 months correlation between Charlottes and Cardiol is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Charlottes Web Holdings and Cardiol Therapeutics Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardiol Therapeutics and Charlottes Web 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 Charlottes Web Holdings are associated (or correlated) with Cardiol Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardiol Therapeutics has no effect on the direction of Charlottes Web i.e., Charlottes Web and Cardiol Therapeutics go up and down completely randomly.

Pair Corralation between Charlottes Web and Cardiol Therapeutics

Assuming the 90 days trading horizon Charlottes Web is expected to generate 1.78 times less return on investment than Cardiol Therapeutics. In addition to that, Charlottes Web is 1.65 times more volatile than Cardiol Therapeutics Class. It trades about 0.03 of its total potential returns per unit of risk. Cardiol Therapeutics Class is currently generating about 0.1 per unit of volatility. If you would invest  132.00  in Cardiol Therapeutics Class on April 20, 2025 and sell it today you would earn a total of  29.00  from holding Cardiol Therapeutics Class or generate 21.97% return on investment over 90 days.

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

Charlottes Web Holdings  vs.  Cardiol Therapeutics Class

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.

Cardiol Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardiol Therapeutics Class are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cardiol Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charlottes Web and Cardiol Therapeutics

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

The idea behind Charlottes Web Holdings and Cardiol Therapeutics Class 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.