Correlation Between Marimed and Lowell Farms
Can any of the company-specific risk be diversified away by investing in both Marimed and Lowell Farms 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 Lowell Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marimed and Lowell Farms, you can compare the effects of market volatilities on Marimed and Lowell Farms 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 Lowell Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimed and Lowell Farms.
Diversification Opportunities for Marimed and Lowell Farms
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marimed and Lowell is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Marimed and Lowell Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowell Farms 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 Lowell Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowell Farms has no effect on the direction of Marimed i.e., Marimed and Lowell Farms go up and down completely randomly.
Pair Corralation between Marimed and Lowell Farms
Given the investment horizon of 90 days Marimed is expected to under-perform the Lowell Farms. But the otc stock apears to be less risky and, when comparing its historical volatility, Marimed is 3.19 times less risky than Lowell Farms. The otc stock trades about -0.05 of its potential returns per unit of risk. The Lowell Farms is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.20 in Lowell Farms on November 2, 2024 and sell it today you would lose (0.02) from holding Lowell Farms or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marimed vs. Lowell Farms
Performance |
| Timeline |
| Marimed |
| Lowell Farms |
Marimed and Lowell Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marimed and Lowell Farms
The main advantage of trading using opposite Marimed and Lowell Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marimed position performs unexpectedly, Lowell Farms 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 Lowell Farms will offset losses from the drop in Lowell Farms' long position.| Marimed vs. Verano Holdings Corp | Marimed vs. Cresco Labs | Marimed vs. AYR Strategies Class | Marimed vs. Green Thumb Industries |
| Lowell Farms vs. Medicine Man Technologies | Lowell Farms vs. Ascend Wellness Holdings | Lowell Farms vs. Goodness Growth Holdings | Lowell Farms vs. AYR Strategies Class |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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