Correlation Between Whole Earth and Better Choice
Can any of the company-specific risk be diversified away by investing in both Whole Earth and Better Choice 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 Whole Earth and Better Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whole Earth Brands and Better Choice, you can compare the effects of market volatilities on Whole Earth and Better Choice 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 Whole Earth with a short position of Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whole Earth and Better Choice.
Diversification Opportunities for Whole Earth and Better Choice
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Whole and Better is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Whole Earth Brands and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice and Whole Earth 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 Whole Earth Brands are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Whole Earth i.e., Whole Earth and Better Choice go up and down completely randomly.
Pair Corralation between Whole Earth and Better Choice
Given the investment horizon of 90 days Whole Earth Brands is expected to generate 0.68 times more return on investment than Better Choice. However, Whole Earth Brands is 1.47 times less risky than Better Choice. It trades about -0.02 of its potential returns per unit of risk. Better Choice is currently generating about -0.02 per unit of risk. If you would invest 439.00 in Whole Earth Brands on August 27, 2024 and sell it today you would lose (439.00) from holding Whole Earth Brands or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.48% |
| Values | Daily Returns |
Whole Earth Brands vs. Better Choice
Performance |
| Timeline |
| Whole Earth Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Better Choice |
Whole Earth and Better Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whole Earth and Better Choice
The main advantage of trading using opposite Whole Earth and Better Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whole Earth position performs unexpectedly, Better Choice 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 Better Choice will offset losses from the drop in Better Choice's long position.| Whole Earth vs. Seneca Foods Corp | Whole Earth vs. Lifeway Foods | Whole Earth vs. John B Sanfilippo | Whole Earth vs. Real Good Food |
| Better Choice vs. Blue Star Foods | Better Choice vs. Stryve Foods | Better Choice vs. BioAdaptives | Better Choice vs. Beyond Oil |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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