Correlation Between Calavo Growers and Colabor

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

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

Diversification Opportunities for Calavo Growers and Colabor

0.0

Correlation Coefficient

Calavo Growers  Colabor

Pay attention - limited upside

The 3 months correlation between Calavo and Colabor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and Colabor Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colabor Group and Calavo Growers 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 Calavo Growers are associated (or correlated) with Colabor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colabor Group has no effect on the direction of Calavo Growers i.e., Calavo Growers and Colabor go up and down completely randomly.

Pair Corralation between Calavo Growers and Colabor

Given the investment horizon of 90 days Calavo Growers is expected to generate 0.7 times more return on investment than Colabor. However, Calavo Growers is 1.42 times less risky than Colabor. It trades about 0.12 of its potential returns per unit of risk. Colabor Group is currently generating about -0.19 per unit of risk. If you would invest  2,345  in Calavo Growers on September 5, 2024 and sell it today you would earn a total of  409.00  from holding Calavo Growers or generate 17.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Calavo Growers  vs.  Colabor Group

Calavo Growers

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calavo Growers are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Calavo Growers showed solid returns over the last few months and may actually be approaching a breakup point.

Colabor Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colabor Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental 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 Calavo Growers and Colabor

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

The idea behind Calavo Growers and Colabor Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.