Correlation Between Edible Garden and PriceSmart
Can any of the company-specific risk be diversified away by investing in both Edible Garden and PriceSmart 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 PriceSmart 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 PriceSmart, you can compare the effects of market volatilities on Edible Garden and PriceSmart 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 PriceSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and PriceSmart.
Diversification Opportunities for Edible Garden and PriceSmart
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Edible and PriceSmart is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and PriceSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PriceSmart 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 PriceSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PriceSmart has no effect on the direction of Edible Garden i.e., Edible Garden and PriceSmart go up and down completely randomly.
Pair Corralation between Edible Garden and PriceSmart
Given the investment horizon of 90 days Edible Garden AG is expected to under-perform the PriceSmart. In addition to that, Edible Garden is 3.55 times more volatile than PriceSmart. It trades about -0.1 of its total potential returns per unit of risk. PriceSmart is currently generating about 0.01 per unit of volatility. If you would invest 9,115 in PriceSmart on August 27, 2024 and sell it today you would lose (23.00) from holding PriceSmart or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edible Garden AG vs. PriceSmart
Performance |
| Timeline |
| Edible Garden AG |
| PriceSmart |
Edible Garden and PriceSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edible Garden and PriceSmart
The main advantage of trading using opposite Edible Garden and PriceSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden position performs unexpectedly, PriceSmart 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 PriceSmart will offset losses from the drop in PriceSmart'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 |
| PriceSmart vs. Wal Mart de | PriceSmart vs. Pan Pacific International | PriceSmart vs. Dollarama | PriceSmart vs. Dollar General |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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