Correlation Between Trulieve Cannabis and Verano Holdings
Can any of the company-specific risk be diversified away by investing in both Trulieve Cannabis and Verano Holdings 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 Trulieve Cannabis and Verano Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trulieve Cannabis Corp and Verano Holdings Corp, you can compare the effects of market volatilities on Trulieve Cannabis and Verano Holdings 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 Trulieve Cannabis with a short position of Verano Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trulieve Cannabis and Verano Holdings.
Diversification Opportunities for Trulieve Cannabis and Verano Holdings
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Trulieve and Verano is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Trulieve Cannabis Corp and Verano Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verano Holdings Corp and Trulieve Cannabis 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 Trulieve Cannabis Corp are associated (or correlated) with Verano Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verano Holdings Corp has no effect on the direction of Trulieve Cannabis i.e., Trulieve Cannabis and Verano Holdings go up and down completely randomly.
Pair Corralation between Trulieve Cannabis and Verano Holdings
Assuming the 90 days horizon Trulieve Cannabis Corp is expected to generate 1.1 times more return on investment than Verano Holdings. However, Trulieve Cannabis is 1.1 times more volatile than Verano Holdings Corp. It trades about -0.24 of its potential returns per unit of risk. Verano Holdings Corp is currently generating about -0.36 per unit of risk. If you would invest 1,305 in Trulieve Cannabis Corp on August 28, 2024 and sell it today you would lose (698.00) from holding Trulieve Cannabis Corp or give up 53.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Trulieve Cannabis Corp vs. Verano Holdings Corp
Performance |
| Timeline |
| Trulieve Cannabis Corp |
| Verano Holdings Corp |
Trulieve Cannabis and Verano Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trulieve Cannabis and Verano Holdings
The main advantage of trading using opposite Trulieve Cannabis and Verano Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trulieve Cannabis position performs unexpectedly, Verano Holdings 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 Verano Holdings will offset losses from the drop in Verano Holdings' long position.| Trulieve Cannabis vs. Green Thumb Industries | Trulieve Cannabis vs. Curaleaf Holdings | Trulieve Cannabis vs. Cresco Labs | Trulieve Cannabis vs. GrowGeneration Corp |
| Verano Holdings vs. Cresco Labs | Verano Holdings vs. AYR Strategies Class | Verano Holdings vs. Green Thumb Industries | Verano Holdings vs. Marimed |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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