Correlation Between Trulieve Cannabis and GrowGeneration Corp

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

Diversification Opportunities for Trulieve Cannabis and GrowGeneration Corp

0.75

Correlation Coefficient

Trulieve Cannabis  GrowGeneration Corp

Poor diversification

The 3 months correlation between Trulieve and GrowGeneration is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Trulieve Cannabis Corp and GrowGeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrowGeneration Corp 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 GrowGeneration Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrowGeneration Corp has no effect on the direction of Trulieve Cannabis i.e., Trulieve Cannabis and GrowGeneration Corp go up and down completely randomly.

Pair Corralation between Trulieve Cannabis and GrowGeneration Corp

Assuming the 90 days horizon Trulieve Cannabis Corp is expected to under-perform the GrowGeneration Corp. In addition to that, Trulieve Cannabis is 1.81 times more volatile than GrowGeneration Corp. It trades about -0.12 of its total potential returns per unit of risk. GrowGeneration Corp is currently generating about -0.01 per unit of volatility. If you would invest  199.00  in GrowGeneration Corp on September 12, 2024 and sell it today you would lose (12.50) from holding GrowGeneration Corp or give up 6.28% of portfolio value over 90 days.

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

Trulieve Cannabis Corp  vs.  GrowGeneration Corp

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.

GrowGeneration Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Trulieve Cannabis and GrowGeneration Corp

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

The idea behind Trulieve Cannabis Corp and GrowGeneration 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.