Correlation Between Marimed and Trulieve Cannabis
Can any of the company-specific risk be diversified away by investing in both Marimed and Trulieve Cannabis 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 Trulieve Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marimed and Trulieve Cannabis Corp, you can compare the effects of market volatilities on Marimed and Trulieve Cannabis 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 Trulieve Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimed and Trulieve Cannabis.
Diversification Opportunities for Marimed and Trulieve Cannabis
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Marimed and Trulieve is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Marimed and Trulieve Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trulieve Cannabis Corp 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 Trulieve Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trulieve Cannabis Corp has no effect on the direction of Marimed i.e., Marimed and Trulieve Cannabis go up and down completely randomly.
Pair Corralation between Marimed and Trulieve Cannabis
Given the investment horizon of 90 days Marimed is expected to generate 0.59 times more return on investment than Trulieve Cannabis. However, Marimed is 1.71 times less risky than Trulieve Cannabis. It trades about -0.06 of its potential returns per unit of risk. Trulieve Cannabis Corp is currently generating about -0.25 per unit of risk. If you would invest 17.00 in Marimed on August 28, 2024 and sell it today you would lose (2.00) from holding Marimed or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marimed vs. Trulieve Cannabis Corp
Performance |
| Timeline |
| Marimed |
| Trulieve Cannabis Corp |
Marimed and Trulieve Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marimed and Trulieve Cannabis
The main advantage of trading using opposite Marimed and Trulieve Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marimed position performs unexpectedly, Trulieve Cannabis 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 Trulieve Cannabis will offset losses from the drop in Trulieve Cannabis' long position.The idea behind Marimed and Trulieve Cannabis Corp 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.| Trulieve Cannabis vs. Rezolute | Trulieve Cannabis vs. Tempest Therapeutics | Trulieve Cannabis vs. Forte Biosciences | Trulieve Cannabis vs. Dyadic International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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