Correlation Between Farmmi and Whole Earth
Can any of the company-specific risk be diversified away by investing in both Farmmi and Whole Earth 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 Farmmi and Whole Earth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmmi Inc and Whole Earth Brands, you can compare the effects of market volatilities on Farmmi and Whole Earth 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 Farmmi with a short position of Whole Earth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmmi and Whole Earth.
Diversification Opportunities for Farmmi and Whole Earth
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Farmmi and Whole is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Farmmi Inc and Whole Earth Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whole Earth Brands and Farmmi 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 Farmmi Inc are associated (or correlated) with Whole Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whole Earth Brands has no effect on the direction of Farmmi i.e., Farmmi and Whole Earth go up and down completely randomly.
Pair Corralation between Farmmi and Whole Earth
Given the investment horizon of 90 days Farmmi Inc is expected to generate 0.73 times more return on investment than Whole Earth. However, Farmmi Inc is 1.36 times less risky than Whole Earth. It trades about -0.05 of its potential returns per unit of risk. Whole Earth Brands is currently generating about -0.09 per unit of risk. If you would invest 104.00 in Farmmi Inc on September 1, 2024 and sell it today you would lose (75.00) from holding Farmmi Inc or give up 72.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 57.45% |
| Values | Daily Returns |
Farmmi Inc vs. Whole Earth Brands
Performance |
| Timeline |
| Farmmi Inc |
| Whole Earth Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Farmmi and Whole Earth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmmi and Whole Earth
The main advantage of trading using opposite Farmmi and Whole Earth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmmi position performs unexpectedly, Whole Earth 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 Whole Earth will offset losses from the drop in Whole Earth's long position.The idea behind Farmmi Inc and Whole Earth Brands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Whole Earth vs. Seneca Foods Corp | Whole Earth vs. Lifeway Foods | Whole Earth vs. John B Sanfilippo | Whole Earth vs. Real Good Food |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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