Correlation Between Terrascend Corp and Stem Holdings

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

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

Diversification Opportunities for Terrascend Corp and Stem Holdings

0.0

Correlation Coefficient

Terrascend Corp  Stem Holdings

Pay attention - limited upside

The 3 months correlation between Terrascend and Stem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Terrascend Corp and Stem Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Holdings and Terrascend Corp 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 Terrascend Corp are associated (or correlated) with Stem Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Holdings has no effect on the direction of Terrascend Corp i.e., Terrascend Corp and Stem Holdings go up and down completely randomly.

Pair Corralation between Terrascend Corp and Stem Holdings

If you would invest  1.00  in Stem Holdings on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Stem Holdings or generate 0.0% return on investment over 90 days.

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

Terrascend Corp  vs.  Stem Holdings

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.

Stem Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Terrascend Corp and Stem Holdings

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

The idea behind Terrascend Corp and Stem 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.