Correlation Between Clean Seas and Local Bounti
Can any of the company-specific risk be diversified away by investing in both Clean Seas 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 Clean Seas and Local Bounti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Seas Seafood and Local Bounti Corp, you can compare the effects of market volatilities on Clean Seas 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 Clean Seas with a short position of Local Bounti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and Local Bounti.
Diversification Opportunities for Clean Seas and Local Bounti
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Clean and Local is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood 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 Clean Seas 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 Clean Seas Seafood 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 Clean Seas i.e., Clean Seas and Local Bounti go up and down completely randomly.
Pair Corralation between Clean Seas and Local Bounti
Assuming the 90 days horizon Clean Seas Seafood is expected to under-perform the Local Bounti. But the pink sheet apears to be less risky and, when comparing its historical volatility, Clean Seas Seafood is 1.81 times less risky than Local Bounti. The pink sheet trades about -0.05 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 | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Clean Seas Seafood vs. Local Bounti Corp
Performance |
| Timeline |
| Clean Seas Seafood |
| Local Bounti Corp |
Clean Seas and Local Bounti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Seas and Local Bounti
The main advantage of trading using opposite Clean Seas and Local Bounti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas 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.| Clean Seas vs. Avi Ltd ADR | Clean Seas vs. Altavoz Entertainment | Clean Seas vs. The a2 Milk | Clean Seas vs. Aryzta AG PK |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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