Correlation Between Flowers Foods and Edible Garden
Can any of the company-specific risk be diversified away by investing in both Flowers Foods and Edible Garden 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 Flowers Foods and Edible Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and Edible Garden AG, you can compare the effects of market volatilities on Flowers Foods and Edible Garden 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 Flowers Foods with a short position of Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and Edible Garden.
Diversification Opportunities for Flowers Foods and Edible Garden
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flowers and Edible is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG and Flowers Foods 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 Flowers Foods are associated (or correlated) with Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Flowers Foods i.e., Flowers Foods and Edible Garden go up and down completely randomly.
Pair Corralation between Flowers Foods and Edible Garden
Considering the 90-day investment horizon Flowers Foods is expected to generate 0.13 times more return on investment than Edible Garden. However, Flowers Foods is 7.57 times less risky than Edible Garden. It trades about -0.02 of its potential returns per unit of risk. Edible Garden AG is currently generating about -0.1 per unit of risk. If you would invest 2,698 in Flowers Foods on August 30, 2024 and sell it today you would lose (425.00) from holding Flowers Foods or give up 15.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowers Foods vs. Edible Garden AG
Performance |
| Timeline |
| Flowers Foods |
| Edible Garden AG |
Flowers Foods and Edible Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and Edible Garden
The main advantage of trading using opposite Flowers Foods and Edible Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods position performs unexpectedly, Edible Garden 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 Edible Garden will offset losses from the drop in Edible Garden's long position.| Flowers Foods vs. ConAgra Foods | Flowers Foods vs. McCormick Company Incorporated | Flowers Foods vs. Campbell Soup | Flowers Foods vs. Kellanova |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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