Correlation Between Charlottes Web and Marimed
Can any of the company-specific risk be diversified away by investing in both Charlottes Web 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 Charlottes Web and Marimed 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 Marimed, you can compare the effects of market volatilities on Charlottes Web 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 Charlottes Web with a short position of Marimed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charlottes Web and Marimed.
Diversification Opportunities for Charlottes Web and Marimed
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charlottes and Marimed is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Charlottes Web Holdings and Marimed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimed 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 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 Charlottes Web i.e., Charlottes Web and Marimed go up and down completely randomly.
Pair Corralation between Charlottes Web and Marimed
Assuming the 90 days horizon Charlottes Web Holdings is expected to under-perform the Marimed. But the otc stock apears to be less risky and, when comparing its historical volatility, Charlottes Web Holdings is 1.25 times less risky than Marimed. The otc stock trades about -0.1 of its potential returns per unit of risk. The Marimed is currently generating about -0.01 of returns per unit of risk over similar time horizon. 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 |
Charlottes Web Holdings vs. Marimed
Performance |
| Timeline |
| Charlottes Web Holdings |
| Marimed |
Charlottes Web and Marimed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charlottes Web and Marimed
The main advantage of trading using opposite Charlottes Web and Marimed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charlottes Web 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.| Charlottes Web vs. Green Cures Botanical | Charlottes Web vs. Cann American Corp | Charlottes Web vs. Rimrock Gold Corp | Charlottes Web vs. Galexxy Holdings |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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