Correlation Between Trulieve Cannabis and Biome Grow

Can any of the company-specific risk be diversified away by investing in both Trulieve Cannabis and Biome Grow 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 Biome Grow 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 Biome Grow, you can compare the effects of market volatilities on Trulieve Cannabis and Biome Grow 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 Biome Grow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trulieve Cannabis and Biome Grow.

Diversification Opportunities for Trulieve Cannabis and Biome Grow

0.14

Correlation Coefficient

Trulieve Cannabis  Biome Grow

Average diversification

The 3 months correlation between Trulieve and Biome is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Trulieve Cannabis Corp and Biome Grow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biome Grow 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 Biome Grow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biome Grow has no effect on the direction of Trulieve Cannabis i.e., Trulieve Cannabis and Biome Grow go up and down completely randomly.

Pair Corralation between Trulieve Cannabis and Biome Grow

Assuming the 90 days horizon Trulieve Cannabis is expected to generate 4.44 times less return on investment than Biome Grow. But when comparing it to its historical volatility, Trulieve Cannabis Corp is 5.9 times less risky than Biome Grow. It trades about 0.09 of its potential returns per unit of risk. Biome Grow is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.38  in Biome Grow on October 6, 2024 and sell it today you would lose (0.19) from holding Biome Grow or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Trulieve Cannabis Corp  vs.  Biome Grow

Trulieve Cannabis Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trulieve Cannabis Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Biome Grow

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biome Grow are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Biome Grow reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trulieve Cannabis and Biome Grow

The main advantage of trading using opposite Trulieve Cannabis and Biome Grow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trulieve Cannabis position performs unexpectedly, Biome Grow 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 Biome Grow will offset losses from the drop in Biome Grow's long position.

The idea behind Trulieve Cannabis Corp and Biome Grow 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.