Correlation Between AquaBounty Technologies and Local Bounti
Can any of the company-specific risk be diversified away by investing in both AquaBounty Technologies 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 AquaBounty Technologies and Local Bounti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AquaBounty Technologies and Local Bounti Corp, you can compare the effects of market volatilities on AquaBounty Technologies 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 AquaBounty Technologies with a short position of Local Bounti. Check out your portfolio center. Please also check ongoing floating volatility patterns of AquaBounty Technologies and Local Bounti.
Diversification Opportunities for AquaBounty Technologies and Local Bounti
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between AquaBounty and Local is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding AquaBounty Technologies 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 AquaBounty Technologies 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 AquaBounty Technologies 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 AquaBounty Technologies i.e., AquaBounty Technologies and Local Bounti go up and down completely randomly.
Pair Corralation between AquaBounty Technologies and Local Bounti
Considering the 90-day investment horizon AquaBounty Technologies is expected to under-perform the Local Bounti. But the stock apears to be less risky and, when comparing its historical volatility, AquaBounty Technologies is 1.04 times less risky than Local Bounti. The stock trades about -0.02 of its potential returns per unit of risk. The Local Bounti Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 124.00 in Local Bounti Corp on August 25, 2024 and sell it today you would earn a total of 43.00 from holding Local Bounti Corp or generate 34.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AquaBounty Technologies vs. Local Bounti Corp
Performance |
| Timeline |
| AquaBounty Technologies |
| Local Bounti Corp |
AquaBounty Technologies and Local Bounti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AquaBounty Technologies and Local Bounti
The main advantage of trading using opposite AquaBounty Technologies and Local Bounti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AquaBounty Technologies 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.| AquaBounty Technologies vs. Atlantic Sapphire ASA | AquaBounty Technologies vs. Local Bounti Corp | AquaBounty Technologies vs. Forafric Global PLC | AquaBounty Technologies vs. Forafric Global PLC |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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