Correlation Between Central Garden and Boosh Plant-Based

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

By analyzing existing cross correlation between Central Garden Pet and Boosh Plant Based Brands, you can compare the effects of market volatilities on Central Garden and Boosh Plant-Based 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 Central Garden with a short position of Boosh Plant-Based. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Boosh Plant-Based.

Diversification Opportunities for Central Garden and Boosh Plant-Based

0.49

Correlation Coefficient

Central Garden  Boosh Plant-Based

Very weak diversification

The 3 months correlation between Central and Boosh is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Boosh Plant Based Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boosh Plant Based and Central Garden 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 Central Garden Pet are associated (or correlated) with Boosh Plant-Based. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boosh Plant Based has no effect on the direction of Central Garden i.e., Central Garden and Boosh Plant-Based go up and down completely randomly.

Pair Corralation between Central Garden and Boosh Plant-Based

Assuming the 90 days horizon Central Garden is expected to generate 18.38 times less return on investment than Boosh Plant-Based. But when comparing it to its historical volatility, Central Garden Pet is 23.87 times less risky than Boosh Plant-Based. It trades about 0.22 of its potential returns per unit of risk. Boosh Plant Based Brands is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.16  in Boosh Plant Based Brands on September 3, 2024 and sell it today you would earn a total of  0.02  from holding Boosh Plant Based Brands or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Central Garden Pet  vs.  Boosh Plant Based Brands

Central Garden Pet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Garden Pet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Central Garden is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Boosh Plant Based

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boosh Plant Based Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward indicators, Boosh Plant-Based reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Garden and Boosh Plant-Based

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

The idea behind Central Garden Pet and Boosh Plant Based Brands 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.