Correlation Between Fresh Grapes and CV Sciences

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

By analyzing existing cross correlation between Fresh Grapes LLC and CV Sciences, you can compare the effects of market volatilities on Fresh Grapes and CV Sciences 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 Fresh Grapes with a short position of CV Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Grapes and CV Sciences.

Diversification Opportunities for Fresh Grapes and CV Sciences

0.53

Correlation Coefficient

Fresh Grapes  CV Sciences

Very weak diversification

The 3 months correlation between Fresh and CVSI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and CV Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CV Sciences and Fresh Grapes 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 Fresh Grapes LLC are associated (or correlated) with CV Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CV Sciences has no effect on the direction of Fresh Grapes i.e., Fresh Grapes and CV Sciences go up and down completely randomly.

Pair Corralation between Fresh Grapes and CV Sciences

Given the investment horizon of 90 days Fresh Grapes LLC is expected to generate 1.04 times more return on investment than CV Sciences. However, Fresh Grapes is 1.04 times more volatile than CV Sciences. It trades about 0.04 of its potential returns per unit of risk. CV Sciences is currently generating about -0.04 per unit of risk. If you would invest  64.00  in Fresh Grapes LLC on September 24, 2024 and sell it today you would lose (2.59) from holding Fresh Grapes LLC or give up 4.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Fresh Grapes LLC  vs.  CV Sciences

Fresh Grapes LLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Grapes LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fresh Grapes exhibited solid returns over the last few months and may actually be approaching a breakup point.

CV Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CV Sciences 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Fresh Grapes and CV Sciences

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

The idea behind Fresh Grapes LLC and CV Sciences 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.