Correlation Between Alico and Edible Garden

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

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

Diversification Opportunities for Alico and Edible Garden

-0.05

Correlation Coefficient

Alico  Edible Garden

Good diversification

The 3 months correlation between Alico and Edible is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alico Inc and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG and Alico 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 Alico Inc are associated (or correlated) with Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Alico i.e., Alico and Edible Garden go up and down completely randomly.

Pair Corralation between Alico and Edible Garden

Given the investment horizon of 90 days Alico is expected to generate 823.27 times less return on investment than Edible Garden. But when comparing it to its historical volatility, Alico Inc is 80.54 times less risky than Edible Garden. It trades about 0.02 of its potential returns per unit of risk. Edible Garden AG is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2.09  in Edible Garden AG on September 26, 2024 and sell it today you would earn a total of  7.01  from holding Edible Garden AG or generate 335.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.4%
Values	Daily Returns

Alico Inc  vs.  Edible Garden AG

Alico Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alico Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Alico is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Edible Garden AG

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Edible Garden showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alico and Edible Garden

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

The idea behind Alico Inc and Edible Garden AG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.