Correlation Between Whole Earth and Laird Superfood
Can any of the company-specific risk be diversified away by investing in both Whole Earth and Laird Superfood 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 Laird Superfood 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 Laird Superfood, you can compare the effects of market volatilities on Whole Earth and Laird Superfood 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 Laird Superfood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whole Earth and Laird Superfood.
Diversification Opportunities for Whole Earth and Laird Superfood
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Whole and Laird is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Whole Earth Brands and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood 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 Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of Whole Earth i.e., Whole Earth and Laird Superfood go up and down completely randomly.
Pair Corralation between Whole Earth and Laird Superfood
Given the investment horizon of 90 days Whole Earth Brands is expected to under-perform the Laird Superfood. But the stock apears to be less risky and, when comparing its historical volatility, Whole Earth Brands is 1.31 times less risky than Laird Superfood. The stock trades about -0.02 of its potential returns per unit of risk. The Laird Superfood is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 120.00 in Laird Superfood on August 27, 2024 and sell it today you would earn a total of 737.00 from holding Laird Superfood or generate 614.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.48% |
| Values | Daily Returns |
Whole Earth Brands vs. Laird Superfood
Performance |
| Timeline |
| Whole Earth Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Laird Superfood |
Whole Earth and Laird Superfood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whole Earth and Laird Superfood
The main advantage of trading using opposite Whole Earth and Laird Superfood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whole Earth position performs unexpectedly, Laird Superfood 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 Laird Superfood will offset losses from the drop in Laird Superfood'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 |
| Laird Superfood vs. Better Choice | Laird Superfood vs. Sharing Services Global | Laird Superfood vs. Bit Origin | Laird Superfood vs. Planet Green Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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