Correlation Between Marimed and Charlottes Web
Can any of the company-specific risk be diversified away by investing in both Marimed and Charlottes Web 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 Charlottes Web into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marimed and Charlottes Web Holdings, you can compare the effects of market volatilities on Marimed and Charlottes Web 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 Charlottes Web. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimed and Charlottes Web.
Diversification Opportunities for Marimed and Charlottes Web
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marimed and Charlottes is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Marimed and Charlottes Web Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlottes Web Holdings 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 Charlottes Web. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlottes Web Holdings has no effect on the direction of Marimed i.e., Marimed and Charlottes Web go up and down completely randomly.
Pair Corralation between Marimed and Charlottes Web
Given the investment horizon of 90 days Marimed is expected to generate 1.25 times more return on investment than Charlottes Web. However, Marimed is 1.25 times more volatile than Charlottes Web Holdings. It trades about -0.01 of its potential returns per unit of risk. Charlottes Web Holdings is currently generating about -0.1 per unit of risk. 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 |
Marimed vs. Charlottes Web Holdings
Performance |
| Timeline |
| Marimed |
| Charlottes Web Holdings |
Marimed and Charlottes Web Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marimed and Charlottes Web
The main advantage of trading using opposite Marimed and Charlottes Web positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marimed position performs unexpectedly, Charlottes Web 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 Charlottes Web will offset losses from the drop in Charlottes Web's long position.| Marimed vs. Green Cures Botanical | Marimed vs. Cann American Corp | Marimed vs. Rimrock Gold Corp | Marimed vs. Galexxy Holdings |
| Charlottes Web vs. Green Cures Botanical | Charlottes Web vs. Cann American Corp | Charlottes Web vs. Rimrock Gold Corp | Charlottes Web 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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