Correlation Between General Cannabis and Marimed
Can any of the company-specific risk be diversified away by investing in both General Cannabis and Marimed 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 General Cannabis and Marimed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Cannabis Corp and Marimed, you can compare the effects of market volatilities on General Cannabis and Marimed 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 General Cannabis with a short position of Marimed. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Cannabis and Marimed.
Diversification Opportunities for General Cannabis and Marimed
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between General and Marimed is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Cannabis Corp and Marimed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimed and General Cannabis 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 General Cannabis Corp are associated (or correlated) with Marimed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marimed has no effect on the direction of General Cannabis i.e., General Cannabis and Marimed go up and down completely randomly.
Pair Corralation between General Cannabis and Marimed
Given the investment horizon of 90 days General Cannabis Corp is expected to under-perform the Marimed. In addition to that, General Cannabis is 1.46 times more volatile than Marimed. It trades about -0.14 of its total potential returns per unit of risk. Marimed is currently generating about -0.01 per unit of volatility. If you would invest 16.00 in Marimed on August 30, 2024 and sell it today you would lose (1.00) from holding Marimed or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Cannabis Corp vs. Marimed
Performance |
| Timeline |
| General Cannabis Corp |
| Marimed |
General Cannabis and Marimed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Cannabis and Marimed
The main advantage of trading using opposite General Cannabis and Marimed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Cannabis position performs unexpectedly, Marimed 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 Marimed will offset losses from the drop in Marimed's long position.| General Cannabis vs. Verano Holdings Corp | General Cannabis vs. 4Front Ventures Corp | General Cannabis vs. Ascend Wellness Holdings | General Cannabis vs. Medicine Man Technologies |
| Marimed vs. Green Cures Botanical | Marimed vs. Cann American Corp | Marimed vs. Rimrock Gold Corp | Marimed vs. Galexxy Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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