Correlation Between CV Sciences and Trulieve Cannabis

Can any of the company-specific risk be diversified away by investing in both CV Sciences and Trulieve Cannabis 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 CV Sciences and Trulieve Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CV Sciences and Trulieve Cannabis

0.53

Correlation Coefficient

CV Sciences  Trulieve Cannabis

Very weak diversification

The 3 months correlation between CVSI and Trulieve is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CV Sciences and Trulieve Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trulieve Cannabis Corp and CV Sciences 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 CV Sciences are associated (or correlated) with Trulieve Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trulieve Cannabis Corp has no effect on the direction of CV Sciences i.e., CV Sciences and Trulieve Cannabis go up and down completely randomly.

Pair Corralation between CV Sciences and Trulieve Cannabis

Given the investment horizon of 90 days CV Sciences is expected to generate 1.34 times more return on investment than Trulieve Cannabis. However, CV Sciences is 1.34 times more volatile than Trulieve Cannabis Corp. It trades about 0.01 of its potential returns per unit of risk. Trulieve Cannabis Corp is currently generating about -0.05 per unit of risk. If you would invest  5.00  in CV Sciences on September 1, 2024 and sell it today you would lose (1.00) from holding CV Sciences or give up 20.0% of portfolio value over 90 days.

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

CV Sciences  vs.  Trulieve Cannabis Corp

CV Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CV Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CV Sciences is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CV Sciences and Trulieve Cannabis

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

The idea behind CV Sciences and Trulieve Cannabis 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.