Correlation Between Marimed and TILT Holdings

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

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

Diversification Opportunities for Marimed and TILT Holdings

0.64

Correlation Coefficient

Marimed  TILT Holdings

Poor diversification

The 3 months correlation between Marimed and TILT is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Marimed and TILT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TILT Holdings and Marimed 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 Marimed are associated (or correlated) with TILT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TILT Holdings has no effect on the direction of Marimed i.e., Marimed and TILT Holdings go up and down completely randomly.

Pair Corralation between Marimed and TILT Holdings

Given the investment horizon of 90 days Marimed is expected to generate 0.57 times more return on investment than TILT Holdings. However, Marimed is 1.77 times less risky than TILT Holdings. It trades about -0.06 of its potential returns per unit of risk. TILT Holdings is currently generating about -0.2 per unit of risk. If you would invest  16.00  in Marimed on September 5, 2024 and sell it today you would lose (2.00) from holding Marimed or give up 12.5% of portfolio value over 90 days.

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

Marimed  vs.  TILT Holdings

Marimed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marimed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Marimed is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

TILT Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TILT Holdings 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.

Pair Trading with Marimed and TILT Holdings

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

The idea behind Marimed and TILT 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.