Correlation Between Edible Garden and Bon Natural
Can any of the company-specific risk be diversified away by investing in both Edible Garden and Bon Natural 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 Edible Garden and Bon Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edible Garden AG and Bon Natural Life, you can compare the effects of market volatilities on Edible Garden and Bon Natural 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 Edible Garden with a short position of Bon Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and Bon Natural.
Diversification Opportunities for Edible Garden and Bon Natural
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edible and Bon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life and Edible Garden 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 Edible Garden AG are associated (or correlated) with Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of Edible Garden i.e., Edible Garden and Bon Natural go up and down completely randomly.
Pair Corralation between Edible Garden and Bon Natural
Given the investment horizon of 90 days Edible Garden AG is expected to under-perform the Bon Natural. In addition to that, Edible Garden is 2.06 times more volatile than Bon Natural Life. It trades about -0.13 of its total potential returns per unit of risk. Bon Natural Life is currently generating about 0.11 per unit of volatility. If you would invest 145.00 in Bon Natural Life on August 24, 2024 and sell it today you would earn a total of 13.00 from holding Bon Natural Life or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edible Garden AG vs. Bon Natural Life
Performance |
| Timeline |
| Edible Garden AG |
| Bon Natural Life |
Edible Garden and Bon Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edible Garden and Bon Natural
The main advantage of trading using opposite Edible Garden and Bon Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden position performs unexpectedly, Bon Natural 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 Bon Natural will offset losses from the drop in Bon Natural's long position.| Edible Garden vs. Limoneira Co | Edible Garden vs. Alico Inc | Edible Garden vs. Adecoagro SA | Edible Garden vs. Cal Maine Foods |
| Bon Natural vs. Blue Star Foods | Bon Natural vs. Grand Havana | Bon Natural vs. Real Good Food | Bon Natural vs. Central Garden Pet |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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