Correlation Between Bon Natural and Laird Superfood
Can any of the company-specific risk be diversified away by investing in both Bon Natural and Laird Superfood 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 Laird Superfood 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 Laird Superfood, you can compare the effects of market volatilities on Bon Natural and Laird Superfood 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 Laird Superfood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bon Natural and Laird Superfood.
Diversification Opportunities for Bon Natural and Laird Superfood
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bon and Laird is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood 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 Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of Bon Natural i.e., Bon Natural and Laird Superfood go up and down completely randomly.
Pair Corralation between Bon Natural and Laird Superfood
Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Laird Superfood. In addition to that, Bon Natural is 4.22 times more volatile than Laird Superfood. It trades about -0.34 of its total potential returns per unit of risk. Laird Superfood is currently generating about 0.03 per unit of volatility. If you would invest 522.00 in Laird Superfood on January 9, 2025 and sell it today you would lose (2.00) from holding Laird Superfood or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bon Natural Life vs. Laird Superfood
Performance |
| Timeline |
| Bon Natural Life |
| Laird Superfood |
Bon Natural and Laird Superfood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bon Natural and Laird Superfood
The main advantage of trading using opposite Bon Natural and Laird Superfood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bon Natural position performs unexpectedly, Laird Superfood 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 Laird Superfood will offset losses from the drop in Laird Superfood'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 |
| Laird Superfood vs. Better Choice | Laird Superfood vs. Sharing Services Global | Laird Superfood vs. Bit Origin | Laird Superfood vs. Planet Green Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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