Correlation Between Acreage Holdings and Trulieve Cannabis
Can any of the company-specific risk be diversified away by investing in both Acreage Holdings 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 Acreage Holdings and Trulieve Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acreage Holdings and Trulieve Cannabis Corp, you can compare the effects of market volatilities on Acreage Holdings 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 Acreage Holdings with a short position of Trulieve Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acreage Holdings and Trulieve Cannabis.
Diversification Opportunities for Acreage Holdings and Trulieve Cannabis
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Acreage and Trulieve is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Acreage Holdings 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 Acreage Holdings 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 Acreage Holdings 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 Acreage Holdings i.e., Acreage Holdings and Trulieve Cannabis go up and down completely randomly.
Pair Corralation between Acreage Holdings and Trulieve Cannabis
Assuming the 90 days horizon Acreage Holdings is expected to generate 2.0 times more return on investment than Trulieve Cannabis. However, Acreage Holdings is 2.0 times more volatile than Trulieve Cannabis Corp. It trades about 0.0 of its potential returns per unit of risk. Trulieve Cannabis Corp is currently generating about -0.12 per unit of risk. If you would invest 21.00 in Acreage Holdings on September 12, 2024 and sell it today you would lose (9.00) from holding Acreage Holdings or give up 42.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Acreage Holdings vs. Trulieve Cannabis Corp
Performance |
Timeline |
Acreage Holdings |
Trulieve Cannabis Corp |
Acreage Holdings and Trulieve Cannabis Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Acreage Holdings and Trulieve Cannabis
The main advantage of trading using opposite Acreage Holdings and Trulieve Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acreage Holdings 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.Acreage Holdings vs. AYR Strategies Class | Acreage Holdings vs. RIV Capital | Acreage Holdings vs. Verano Holdings Corp | Acreage Holdings vs. BZAM |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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