Correlation Between Bon Natural and Limoneira
Can any of the company-specific risk be diversified away by investing in both Bon Natural and Limoneira 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 Bon Natural and Limoneira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bon Natural Life and Limoneira Co, you can compare the effects of market volatilities on Bon Natural and Limoneira 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 Bon Natural with a short position of Limoneira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bon Natural and Limoneira.
Diversification Opportunities for Bon Natural and Limoneira
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bon and Limoneira is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira and Bon Natural 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 Bon Natural Life are associated (or correlated) with Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Bon Natural i.e., Bon Natural and Limoneira go up and down completely randomly.
Pair Corralation between Bon Natural and Limoneira
Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Limoneira. In addition to that, Bon Natural is 2.5 times more volatile than Limoneira Co. It trades about -0.04 of its total potential returns per unit of risk. Limoneira Co is currently generating about -0.01 per unit of volatility. If you would invest 2,404 in Limoneira Co on November 2, 2024 and sell it today you would lose (96.00) from holding Limoneira Co or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bon Natural Life vs. Limoneira Co
Performance |
| Timeline |
| Bon Natural Life |
| Limoneira |
Bon Natural and Limoneira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bon Natural and Limoneira
The main advantage of trading using opposite Bon Natural and Limoneira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bon Natural position performs unexpectedly, Limoneira 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 Limoneira will offset losses from the drop in Limoneira's long position.| Bon Natural vs. Grand Havana | Bon Natural vs. Central Garden Pet | Bon Natural vs. Natures Sunshine Products | Bon Natural vs. Central Garden Pet |
| Limoneira vs. Dole PLC | Limoneira vs. Alico Inc | Limoneira vs. Adecoagro SA | Limoneira vs. Cal Maine Foods |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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