Correlation Between Marimed and Body
Can any of the company-specific risk be diversified away by investing in both Marimed and Body 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 Marimed and Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marimed and Body and Mind, you can compare the effects of market volatilities on Marimed and Body 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 Marimed with a short position of Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimed and Body.
Diversification Opportunities for Marimed and Body
Very weak diversification
The 3 months correlation between Marimed and Body is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Marimed and Body and Mind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Body and Mind and Marimed 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 Marimed are associated (or correlated) with Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Body and Mind has no effect on the direction of Marimed i.e., Marimed and Body go up and down completely randomly.
Pair Corralation between Marimed and Body
Given the investment horizon of 90 days Marimed is expected to generate 0.63 times more return on investment than Body. However, Marimed is 1.6 times less risky than Body. It trades about -0.01 of its potential returns per unit of risk. Body and Mind is currently generating about -0.19 per unit of risk. If you would invest 16.00 in Marimed on September 1, 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 |
Marimed vs. Body and Mind
Performance |
| Timeline |
| Marimed |
| Body and Mind |
Marimed and Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marimed and Body
The main advantage of trading using opposite Marimed and Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marimed position performs unexpectedly, Body 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 Body will offset losses from the drop in Body's long position.The idea behind Marimed and Body and Mind 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.| Body vs. Goodness Growth Holdings | Body vs. 4Front Ventures Corp | Body vs. Rubicon Organics | Body vs. CLS Holdings USA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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