Correlation Between Edible Garden and Farmmi
Can any of the company-specific risk be diversified away by investing in both Edible Garden and Farmmi 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 Farmmi 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 Farmmi Inc, you can compare the effects of market volatilities on Edible Garden and Farmmi 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 Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and Farmmi.
Diversification Opportunities for Edible Garden and Farmmi
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Edible and Farmmi is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc 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 Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of Edible Garden i.e., Edible Garden and Farmmi go up and down completely randomly.
Pair Corralation between Edible Garden and Farmmi
Given the investment horizon of 90 days Edible Garden AG is expected to generate 1.08 times more return on investment than Farmmi. However, Edible Garden is 1.08 times more volatile than Farmmi Inc. It trades about 0.11 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.12 per unit of risk. If you would invest 15.00 in Edible Garden AG on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Edible Garden AG or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edible Garden AG vs. Farmmi Inc
Performance |
| Timeline |
| Edible Garden AG |
| Farmmi Inc |
Edible Garden and Farmmi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edible Garden and Farmmi
The main advantage of trading using opposite Edible Garden and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden position performs unexpectedly, Farmmi 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 Farmmi will offset losses from the drop in Farmmi's long position.| Edible Garden vs. Golden Agri Resources | Edible Garden vs. Vital Farms | Edible Garden vs. Local Bounti Corp | Edible Garden vs. Fresh Del Monte |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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