Correlation Between CHS and Edible Garden
Can any of the company-specific risk be diversified away by investing in both CHS and Edible Garden 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 CHS and Edible Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHS Inc Pref and Edible Garden AG, you can compare the effects of market volatilities on CHS and Edible Garden 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 CHS with a short position of Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHS and Edible Garden.
Diversification Opportunities for CHS and Edible Garden
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHS and Edible is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CHS Inc Pref and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG and CHS 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 CHS Inc Pref are associated (or correlated) with Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of CHS i.e., CHS and Edible Garden go up and down completely randomly.
Pair Corralation between CHS and Edible Garden
Assuming the 90 days horizon CHS Inc Pref is expected to generate 0.04 times more return on investment than Edible Garden. However, CHS Inc Pref is 23.95 times less risky than Edible Garden. It trades about -0.08 of its potential returns per unit of risk. Edible Garden AG is currently generating about -0.05 per unit of risk. If you would invest 2,700 in CHS Inc Pref on August 31, 2024 and sell it today you would lose (38.00) from holding CHS Inc Pref or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.91% |
| Values | Daily Returns |
CHS Inc Pref vs. Edible Garden AG
Performance |
| Timeline |
| CHS Inc Pref |
| Edible Garden AG |
CHS and Edible Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHS and Edible Garden
The main advantage of trading using opposite CHS and Edible Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHS position performs unexpectedly, Edible Garden 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 Edible Garden will offset losses from the drop in Edible Garden's long position.The idea behind CHS Inc Pref and Edible Garden AG 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.| Edible Garden vs. Edible Garden AG | Edible Garden vs. Iveda Solutions Warrant | Edible Garden vs. Aclarion |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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