Correlation Between Cresco Labs and Terrascend Corp

Can any of the company-specific risk be diversified away by investing in both Cresco Labs and Terrascend Corp 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 Cresco Labs and Terrascend Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cresco Labs and Terrascend Corp

-0.28

Correlation Coefficient

Cresco Labs  Terrascend Corp

Very good diversification

The 3 months correlation between Cresco and Terrascend is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cresco Labs and Terrascend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terrascend Corp and Cresco Labs 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 Cresco Labs are associated (or correlated) with Terrascend Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terrascend Corp has no effect on the direction of Cresco Labs i.e., Cresco Labs and Terrascend Corp go up and down completely randomly.

Pair Corralation between Cresco Labs and Terrascend Corp

If you would invest  155.00  in Terrascend Corp on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Terrascend Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Cresco Labs  vs.  Terrascend Corp

Cresco Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cresco Labs 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 fundamental drivers 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.

Terrascend Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cresco Labs and Terrascend Corp

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

The idea behind Cresco Labs and Terrascend Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..