Correlation Between American Express and Trulieve Cannabis
Can any of the company-specific risk be diversified away by investing in both American Express 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 American Express and Trulieve Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Trulieve Cannabis Corp, you can compare the effects of market volatilities on American Express 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 American Express with a short position of Trulieve Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Trulieve Cannabis.
Diversification Opportunities for American Express and Trulieve Cannabis
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Trulieve is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Express 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 American Express 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 American Express 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 American Express i.e., American Express and Trulieve Cannabis go up and down completely randomly.
Pair Corralation between American Express and Trulieve Cannabis
Considering the 90-day investment horizon American Express is expected to generate 0.43 times more return on investment than Trulieve Cannabis. However, American Express is 2.34 times less risky than Trulieve Cannabis. It trades about -0.08 of its potential returns per unit of risk. Trulieve Cannabis Corp is currently generating about -0.07 per unit of risk. If you would invest 29,663 in American Express on December 29, 2024 and sell it today you would lose (2,461) from holding American Express or give up 8.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Express vs. Trulieve Cannabis Corp
Performance |
Timeline |
American Express |
Trulieve Cannabis Corp |
American Express and Trulieve Cannabis Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and Trulieve Cannabis
The main advantage of trading using opposite American Express and Trulieve Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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