Correlation Between Evolus and Marimed
Can any of the company-specific risk be diversified away by investing in both Evolus 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 Evolus and Marimed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolus Inc and Marimed, you can compare the effects of market volatilities on Evolus 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 Evolus with a short position of Marimed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolus and Marimed.
Diversification Opportunities for Evolus and Marimed
Weak diversification
The 3 months correlation between Evolus and Marimed is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Marimed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimed and Evolus 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 Evolus Inc 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 Evolus i.e., Evolus and Marimed go up and down completely randomly.
Pair Corralation between Evolus and Marimed
Given the investment horizon of 90 days Evolus Inc is expected to under-perform the Marimed. But the stock apears to be less risky and, when comparing its historical volatility, Evolus Inc is 1.56 times less risky than Marimed. The stock trades about -0.19 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 September 2, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolus Inc vs. Marimed
Performance |
| Timeline |
| Evolus Inc |
| Marimed |
Evolus and Marimed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolus and Marimed
The main advantage of trading using opposite Evolus and Marimed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolus 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.| Evolus vs. Crinetics Pharmaceuticals | Evolus vs. Enanta Pharmaceuticals | Evolus vs. Amicus Therapeutics | Evolus vs. Connect Biopharma Holdings |
| Marimed vs. Verano Holdings Corp | Marimed vs. Cresco Labs | Marimed vs. AYR Strategies Class | Marimed vs. Green Thumb Industries |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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