Correlation Between GM and Marimed
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Marimed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Marimed, you can compare the effects of market volatilities on GM 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 GM with a short position of Marimed. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Marimed.
Diversification Opportunities for GM and Marimed
Very weak diversification
The 3 months correlation between GM and Marimed is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Marimed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimed and GM 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 Motors 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 GM i.e., GM and Marimed go up and down completely randomly.
Pair Corralation between GM and Marimed
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.5 times more return on investment than Marimed. However, General Motors is 1.98 times less risky than Marimed. It trades about -0.05 of its potential returns per unit of risk. Marimed is currently generating about -0.05 per unit of risk. If you would invest 5,137 in General Motors on November 3, 2024 and sell it today you would lose (191.00) from holding General Motors or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Marimed
Performance |
| Timeline |
| General Motors |
| Marimed |
GM and Marimed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Marimed
The main advantage of trading using opposite GM and Marimed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and Marimed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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