Correlation Between Verano Holdings and IAnthus Capital

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

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

Diversification Opportunities for Verano Holdings and IAnthus Capital

0.72

Correlation Coefficient

Verano Holdings  IAnthus Capital

Poor diversification

The 3 months correlation between Verano and IAnthus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Verano Holdings Corp and iAnthus Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iAnthus Capital Holdings and Verano Holdings 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 Verano Holdings Corp are associated (or correlated) with IAnthus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iAnthus Capital Holdings has no effect on the direction of Verano Holdings i.e., Verano Holdings and IAnthus Capital go up and down completely randomly.

Pair Corralation between Verano Holdings and IAnthus Capital

Assuming the 90 days horizon Verano Holdings Corp is expected to under-perform the IAnthus Capital. But the otc stock apears to be less risky and, when comparing its historical volatility, Verano Holdings Corp is 2.16 times less risky than IAnthus Capital. The otc stock trades about -0.22 of its potential returns per unit of risk. The iAnthus Capital Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.90  in iAnthus Capital Holdings on October 24, 2024 and sell it today you would lose (0.28) from holding iAnthus Capital Holdings or give up 31.11% of portfolio value over 90 days.

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

Verano Holdings Corp  vs.  iAnthus Capital Holdings

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.

iAnthus Capital Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iAnthus Capital Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IAnthus Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verano Holdings and IAnthus Capital

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

The idea behind Verano Holdings Corp and iAnthus Capital Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.