Correlation Between Edible Garden and Consumer Products
Can any of the company-specific risk be diversified away by investing in both Edible Garden and Consumer Products 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 Consumer Products 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 Consumer Products Fund, you can compare the effects of market volatilities on Edible Garden and Consumer Products 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 Consumer Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and Consumer Products.
Diversification Opportunities for Edible Garden and Consumer Products
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Edible and Consumer is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products 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 Consumer Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Edible Garden i.e., Edible Garden and Consumer Products go up and down completely randomly.
Pair Corralation between Edible Garden and Consumer Products
Given the investment horizon of 90 days Edible Garden AG is expected to under-perform the Consumer Products. In addition to that, Edible Garden is 11.08 times more volatile than Consumer Products Fund. It trades about -0.08 of its total potential returns per unit of risk. Consumer Products Fund is currently generating about -0.03 per unit of volatility. If you would invest 4,420 in Consumer Products Fund on November 5, 2024 and sell it today you would lose (630.00) from holding Consumer Products Fund or give up 14.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edible Garden AG vs. Consumer Products Fund
Performance |
| Timeline |
| Edible Garden AG |
| Consumer Products |
Edible Garden and Consumer Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edible Garden and Consumer Products
The main advantage of trading using opposite Edible Garden and Consumer Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden position performs unexpectedly, Consumer Products 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 Consumer Products will offset losses from the drop in Consumer Products' 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 |
| Consumer Products vs. Basic Materials Fund | Consumer Products vs. Basic Materials Fund | Consumer Products vs. Banking Fund Class | Consumer Products vs. Basic Materials Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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