Correlation Between Edible Garden and Alico

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

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

Diversification Opportunities for Edible Garden and Alico

0.82

Correlation Coefficient

Edible Garden  Alico

Very poor diversification

The 3 months correlation between Edible and Alico is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc and Edible 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 Edible Garden AG are associated (or correlated) with Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of Edible Garden i.e., Edible Garden and Alico go up and down completely randomly.

Pair Corralation between Edible Garden and Alico

Given the investment horizon of 90 days Edible Garden AG is expected to under-perform the Alico. In addition to that, Edible Garden is 3.74 times more volatile than Alico Inc. It trades about -0.28 of its total potential returns per unit of risk. Alico Inc is currently generating about -0.03 per unit of volatility. If you would invest  2,833  in Alico Inc on August 31, 2024 and sell it today you would lose (167.00) from holding Alico Inc or give up 5.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Edible Garden AG  vs.  Alico Inc

Edible Garden AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edible Garden AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with Edible Garden and Alico

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

The idea behind Edible Garden AG and Alico Inc 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 Stocks Directory module to find actively traded stocks across global markets.