Correlation Between AppHarvest and Local Bounti
Can any of the company-specific risk be diversified away by investing in both AppHarvest and Local Bounti 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 AppHarvest and Local Bounti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AppHarvest and Local Bounti Corp, you can compare the effects of market volatilities on AppHarvest and Local Bounti 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 AppHarvest with a short position of Local Bounti. Check out your portfolio center. Please also check ongoing floating volatility patterns of AppHarvest and Local Bounti.
Diversification Opportunities for AppHarvest and Local Bounti
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AppHarvest and Local is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AppHarvest and Local Bounti Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Local Bounti Corp and AppHarvest 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 AppHarvest are associated (or correlated) with Local Bounti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Local Bounti Corp has no effect on the direction of AppHarvest i.e., AppHarvest and Local Bounti go up and down completely randomly.
Pair Corralation between AppHarvest and Local Bounti
Given the investment horizon of 90 days AppHarvest is expected to under-perform the Local Bounti. In addition to that, AppHarvest is 1.26 times more volatile than Local Bounti Corp. It trades about -0.07 of its total potential returns per unit of risk. Local Bounti Corp is currently generating about -0.02 per unit of volatility. If you would invest 1,560 in Local Bounti Corp on August 31, 2024 and sell it today you would lose (1,386) from holding Local Bounti Corp or give up 88.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 28.51% |
| Values | Daily Returns |
AppHarvest vs. Local Bounti Corp
Performance |
| Timeline |
| AppHarvest |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Local Bounti Corp |
AppHarvest and Local Bounti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AppHarvest and Local Bounti
The main advantage of trading using opposite AppHarvest and Local Bounti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AppHarvest position performs unexpectedly, Local Bounti 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 Local Bounti will offset losses from the drop in Local Bounti's long position.| AppHarvest vs. Porch Group | AppHarvest vs. Hydrofarm Holdings Group | AppHarvest vs. Danimer Scientific | AppHarvest vs. Open Lending Corp |
| Local Bounti vs. Fresh Del Monte | Local Bounti vs. Alico Inc | Local Bounti vs. SW Seed Company | Local Bounti vs. Adecoagro SA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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