Correlation Between Trulieve Cannabis and Evoke Pharma

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

Diversification Opportunities for Trulieve Cannabis and Evoke Pharma

0.56

Correlation Coefficient

Trulieve Cannabis  Evoke Pharma

Very weak diversification

The 3 months correlation between Trulieve and Evoke is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Trulieve Cannabis Corp and Evoke Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evoke Pharma 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 Evoke Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evoke Pharma has no effect on the direction of Trulieve Cannabis i.e., Trulieve Cannabis and Evoke Pharma go up and down completely randomly.

Pair Corralation between Trulieve Cannabis and Evoke Pharma

Assuming the 90 days horizon Trulieve Cannabis Corp is expected to under-perform the Evoke Pharma. In addition to that, Trulieve Cannabis is 1.11 times more volatile than Evoke Pharma. It trades about -0.13 of its total potential returns per unit of risk. Evoke Pharma is currently generating about 0.02 per unit of volatility. If you would invest  419.00  in Evoke Pharma on September 12, 2024 and sell it today you would lose (9.00) from holding Evoke Pharma or give up 2.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Trulieve Cannabis Corp  vs.  Evoke Pharma

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Evoke Pharma

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evoke Pharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Evoke Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Trulieve Cannabis and Evoke Pharma

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

The idea behind Trulieve Cannabis Corp and Evoke Pharma 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.