Correlation Between IDP Education and Canopy Growth
Can any of the company-specific risk be diversified away by investing in both IDP Education and Canopy Growth 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 IDP Education and Canopy Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDP Education Limited and Canopy Growth Corp, you can compare the effects of market volatilities on IDP Education and Canopy Growth 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 IDP Education with a short position of Canopy Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDP Education and Canopy Growth.
Diversification Opportunities for IDP Education and Canopy Growth
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IDP and Canopy is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding IDP Education Limited and Canopy Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canopy Growth Corp and IDP Education 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 IDP Education Limited are associated (or correlated) with Canopy Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canopy Growth Corp has no effect on the direction of IDP Education i.e., IDP Education and Canopy Growth go up and down completely randomly.
Pair Corralation between IDP Education and Canopy Growth
Assuming the 90 days horizon IDP Education is expected to generate 31.93 times less return on investment than Canopy Growth. But when comparing it to its historical volatility, IDP Education Limited is 52.66 times less risky than Canopy Growth. It trades about 0.13 of its potential returns per unit of risk. Canopy Growth Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 109.00 in Canopy Growth Corp on July 26, 2025 and sell it today you would earn a total of 23.00 from holding Canopy Growth Corp or generate 21.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
IDP Education Limited vs. Canopy Growth Corp
Performance |
| Timeline |
| IDP Education Limited |
| Canopy Growth Corp |
IDP Education and Canopy Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDP Education and Canopy Growth
The main advantage of trading using opposite IDP Education and Canopy Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDP Education position performs unexpectedly, Canopy Growth 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 Canopy Growth will offset losses from the drop in Canopy Growth's long position.| IDP Education vs. Koolearn Technology Holding | IDP Education vs. Ginebra San Miguel | IDP Education vs. China Education Group | IDP Education vs. Synlait Milk Limited |
| Canopy Growth vs. Aurora Cannabis | Canopy Growth vs. Lyell Immunopharma | Canopy Growth vs. BioLineRx | Canopy Growth vs. Editas Medicine |
Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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