Correlation Between Trulieve Cannabis and C21 Investments

Can any of the company-specific risk be diversified away by investing in both Trulieve Cannabis and C21 Investments 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 C21 Investments 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 C21 Investments, you can compare the effects of market volatilities on Trulieve Cannabis and C21 Investments 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 C21 Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trulieve Cannabis and C21 Investments.

Diversification Opportunities for Trulieve Cannabis and C21 Investments

0.66

Correlation Coefficient

Trulieve Cannabis  C21 Investments

Poor diversification

The 3 months correlation between Trulieve and C21 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Trulieve Cannabis Corp and C21 Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C21 Investments 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 C21 Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C21 Investments has no effect on the direction of Trulieve Cannabis i.e., Trulieve Cannabis and C21 Investments go up and down completely randomly.

Pair Corralation between Trulieve Cannabis and C21 Investments

Assuming the 90 days horizon Trulieve Cannabis Corp is expected to generate 1.01 times more return on investment than C21 Investments. However, Trulieve Cannabis is 1.01 times more volatile than C21 Investments. It trades about 0.09 of its potential returns per unit of risk. C21 Investments is currently generating about -0.12 per unit of risk. If you would invest  560.00  in Trulieve Cannabis Corp on October 6, 2024 and sell it today you would earn a total of  39.00  from holding Trulieve Cannabis Corp or generate 6.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Trulieve Cannabis Corp  vs.  C21 Investments

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.

C21 Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C21 Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, C21 Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Trulieve Cannabis and C21 Investments

The main advantage of trading using opposite Trulieve Cannabis and C21 Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trulieve Cannabis position performs unexpectedly, C21 Investments 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 C21 Investments will offset losses from the drop in C21 Investments' long position.

The idea behind Trulieve Cannabis Corp and C21 Investments 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.