Correlation Between ConAgra Foods and Limoneira

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

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

Diversification Opportunities for ConAgra Foods and Limoneira

-0.47

Correlation Coefficient

ConAgra Foods  Limoneira

Very good diversification

The 3 months correlation between ConAgra and Limoneira is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira and ConAgra Foods 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 ConAgra Foods are associated (or correlated) with Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and Limoneira go up and down completely randomly.

Pair Corralation between ConAgra Foods and Limoneira

Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Limoneira. But the stock apears to be less risky and, when comparing its historical volatility, ConAgra Foods is 1.36 times less risky than Limoneira. The stock trades about -0.14 of its potential returns per unit of risk. The Limoneira Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,411  in Limoneira Co on September 1, 2024 and sell it today you would earn a total of  369.00  from holding Limoneira Co or generate 15.3% return on investment over 90 days.

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

ConAgra Foods  vs.  Limoneira Co

ConAgra Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConAgra Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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.

Limoneira

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Limoneira Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Limoneira reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ConAgra Foods and Limoneira

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

The idea behind ConAgra Foods and Limoneira Co 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.