Correlation Between Edible Garden and Pond Technologies
Can any of the company-specific risk be diversified away by investing in both Edible Garden and Pond Technologies 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 Pond Technologies 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 Pond Technologies Holdings, you can compare the effects of market volatilities on Edible Garden and Pond Technologies 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 Pond Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and Pond Technologies.
Diversification Opportunities for Edible Garden and Pond Technologies
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Edible and Pond is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Pond Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pond Technologies 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 Pond Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pond Technologies has no effect on the direction of Edible Garden i.e., Edible Garden and Pond Technologies go up and down completely randomly.
Pair Corralation between Edible Garden and Pond Technologies
Given the investment horizon of 90 days Edible Garden AG is expected to under-perform the Pond Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Edible Garden AG is 1.68 times less risky than Pond Technologies. The stock trades about -0.13 of its potential returns per unit of risk. The Pond Technologies Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.07 in Pond Technologies Holdings on September 2, 2024 and sell it today you would lose (2.17) from holding Pond Technologies Holdings or give up 70.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Edible Garden AG vs. Pond Technologies Holdings
Performance |
| Timeline |
| Edible Garden AG |
| Pond Technologies |
Edible Garden and Pond Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edible Garden and Pond Technologies
The main advantage of trading using opposite Edible Garden and Pond Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden position performs unexpectedly, Pond Technologies 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 Pond Technologies will offset losses from the drop in Pond Technologies' 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 |
| Pond Technologies vs. Artisan Consumer Goods | Pond Technologies vs. Altavoz Entertainment | Pond Technologies vs. Avi Ltd ADR | Pond Technologies vs. Aryzta AG PK |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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