Correlation Between Trulieve Cannabis and Green Thumb

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

Diversification Opportunities for Trulieve Cannabis and Green Thumb

0.9

Correlation Coefficient

Trulieve Cannabis  Green Thumb

Almost no diversification

The 3 months correlation between Trulieve and Green is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Trulieve Cannabis Corp and Green Thumb Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Thumb Industries 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 Green Thumb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Thumb Industries has no effect on the direction of Trulieve Cannabis i.e., Trulieve Cannabis and Green Thumb go up and down completely randomly.

Pair Corralation between Trulieve Cannabis and Green Thumb

Assuming the 90 days horizon Trulieve Cannabis Corp is expected to under-perform the Green Thumb. In addition to that, Trulieve Cannabis is 1.64 times more volatile than Green Thumb Industries. It trades about -0.05 of its total potential returns per unit of risk. Green Thumb Industries is currently generating about 0.0 per unit of volatility. If you would invest  976.00  in Green Thumb Industries on September 1, 2024 and sell it today you would lose (47.00) from holding Green Thumb Industries or give up 4.82% of portfolio value over 90 days.

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

Trulieve Cannabis Corp  vs.  Green Thumb Industries

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.

Green Thumb Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Trulieve Cannabis and Green Thumb

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

The idea behind Trulieve Cannabis Corp and Green Thumb Industries 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.