Yes it is related, the more application folder you have, the more memory Canvas needs (the Java Virtual Machine needs). If you create a new folder under webapps, you need to increase the Java Virtual Machine memory.
A general recommendation is to have 500MB per application. Each folder that is created in the webapps directory has its own context which means resources aren't shared, i.e. the ROOT and samples directories.
The amount of memory required will also be increased depending on the number of users and size of requests.
Once the JVM (Java Virtual Machine) of the Cubewise Application Server has reached this value, it will slow down because it has to make some spaces for the new objects by deleting unused objects in order to keep the memory below 1024 MB, this is called garbage collector.
Steps to update the JVM maximum memory are explained in this article:
To check the Canvas version, you can go to the About page: