Correlation Between Freshpet and Alico
Can any of the company-specific risk be diversified away by investing in both Freshpet and Alico 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 Freshpet and Alico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and Alico Inc, you can compare the effects of market volatilities on Freshpet and Alico 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 Freshpet with a short position of Alico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and Alico.
Diversification Opportunities for Freshpet and Alico
Very good diversification
The 3 months correlation between Freshpet and Alico is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc and Freshpet 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 Freshpet are associated (or correlated) with Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of Freshpet i.e., Freshpet and Alico go up and down completely randomly.
Pair Corralation between Freshpet and Alico
Given the investment horizon of 90 days Freshpet is expected to generate 1.38 times more return on investment than Alico. However, Freshpet is 1.38 times more volatile than Alico Inc. It trades about 0.23 of its potential returns per unit of risk. Alico Inc is currently generating about 0.08 per unit of risk. If you would invest 13,468 in Freshpet on August 28, 2024 and sell it today you would earn a total of 2,000 from holding Freshpet or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freshpet vs. Alico Inc
Performance |
| Timeline |
| Freshpet |
| Alico Inc |
Freshpet and Alico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freshpet and Alico
The main advantage of trading using opposite Freshpet and Alico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet position performs unexpectedly, Alico 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 Alico will offset losses from the drop in Alico's long position.| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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