Correlation Between Verano Holdings and Choom Holdings

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

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

Diversification Opportunities for Verano Holdings and Choom Holdings

0.25

Correlation Coefficient

Verano Holdings  Choom Holdings

Modest diversification

The 3 months correlation between Verano and Choom is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Verano Holdings Corp and Choom Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choom Holdings and Verano Holdings 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 Verano Holdings Corp are associated (or correlated) with Choom Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choom Holdings has no effect on the direction of Verano Holdings i.e., Verano Holdings and Choom Holdings go up and down completely randomly.

Pair Corralation between Verano Holdings and Choom Holdings

Assuming the 90 days horizon Verano Holdings Corp is expected to generate 0.54 times more return on investment than Choom Holdings. However, Verano Holdings Corp is 1.86 times less risky than Choom Holdings. It trades about -0.17 of its potential returns per unit of risk. Choom Holdings is currently generating about -0.13 per unit of risk. If you would invest  314.00  in Verano Holdings Corp on September 20, 2024 and sell it today you would lose (184.00) from holding Verano Holdings Corp or give up 58.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Verano Holdings Corp  vs.  Choom Holdings

Verano Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verano Holdings 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.

Choom Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choom Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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 Verano Holdings and Choom Holdings

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

The idea behind Verano Holdings Corp and Choom 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.

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