Correlation Between Clean Seas and Edible Garden
Can any of the company-specific risk be diversified away by investing in both Clean Seas 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 Clean Seas and Edible Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Seas Seafood and Edible Garden AG, you can compare the effects of market volatilities on Clean Seas 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 Clean Seas with a short position of Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and Edible Garden.
Diversification Opportunities for Clean Seas and Edible Garden
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clean and Edible is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood 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 Clean Seas 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 Clean Seas Seafood 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 Clean Seas i.e., Clean Seas and Edible Garden go up and down completely randomly.
Pair Corralation between Clean Seas and Edible Garden
Assuming the 90 days horizon Clean Seas Seafood is expected to under-perform the Edible Garden. But the pink sheet apears to be less risky and, when comparing its historical volatility, Clean Seas Seafood is 1.74 times less risky than Edible Garden. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Edible Garden AG is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Edible Garden AG on September 25, 2024 and sell it today you would earn a total of 21.00 from holding Edible Garden AG or generate 140.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Clean Seas Seafood vs. Edible Garden AG
Performance |
Timeline |
Clean Seas Seafood |
Edible Garden AG |
Clean Seas and Edible Garden Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Clean Seas and Edible Garden
The main advantage of trading using opposite Clean Seas and Edible Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas 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.Clean Seas vs. Brasilagro Adr | Clean Seas vs. Alico Inc | Clean Seas vs. Edible Garden AG | Clean Seas vs. Vital Farms |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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