Correlation Between Aleafia Health and Verano Holdings

Can any of the company-specific risk be diversified away by investing in both Aleafia Health 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 Aleafia Health and Verano Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aleafia Health and Verano Holdings Corp, you can compare the effects of market volatilities on Aleafia Health 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 Aleafia Health with a short position of Verano Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aleafia Health and Verano Holdings.

Diversification Opportunities for Aleafia Health and Verano Holdings

-0.26

Correlation Coefficient

Aleafia Health  Verano Holdings

Very good diversification

The 3 months correlation between Aleafia and Verano is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aleafia Health 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 Aleafia Health 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 Aleafia Health 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 Aleafia Health i.e., Aleafia Health and Verano Holdings go up and down completely randomly.

Pair Corralation between Aleafia Health and Verano Holdings

If you would invest  136.00  in Verano Holdings Corp on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Verano Holdings Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Aleafia Health  vs.  Verano Holdings Corp

Aleafia Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aleafia Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aleafia Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Verano Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verano Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aleafia Health and Verano Holdings

The main advantage of trading using opposite Aleafia Health and Verano Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aleafia Health 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.

The idea behind Aleafia Health and Verano Holdings 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.

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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.