Correlation Between Freshpet and Local Bounti
Can any of the company-specific risk be diversified away by investing in both Freshpet and Local Bounti 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 Local Bounti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and Local Bounti Corp, you can compare the effects of market volatilities on Freshpet and Local Bounti 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 Local Bounti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and Local Bounti.
Diversification Opportunities for Freshpet and Local Bounti
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Freshpet and Local is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet and Local Bounti Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Local Bounti Corp 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 Local Bounti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Local Bounti Corp has no effect on the direction of Freshpet i.e., Freshpet and Local Bounti go up and down completely randomly.
Pair Corralation between Freshpet and Local Bounti
Given the investment horizon of 90 days Freshpet is expected to generate 0.27 times more return on investment than Local Bounti. However, Freshpet is 3.68 times less risky than Local Bounti. It trades about 0.09 of its potential returns per unit of risk. Local Bounti Corp is currently generating about -0.01 per unit of risk. If you would invest 6,534 in Freshpet on August 27, 2024 and sell it today you would earn a total of 9,142 from holding Freshpet or generate 139.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freshpet vs. Local Bounti Corp
Performance |
| Timeline |
| Freshpet |
| Local Bounti Corp |
Freshpet and Local Bounti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freshpet and Local Bounti
The main advantage of trading using opposite Freshpet and Local Bounti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet position performs unexpectedly, Local Bounti 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 Local Bounti will offset losses from the drop in Local Bounti's long position.| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
| Local Bounti vs. Bellring Brands LLC | Local Bounti vs. Ingredion Incorporated | Local Bounti vs. Nomad Foods | Local Bounti vs. Simply Good Foods |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Global Correlations Find global opportunities by holding instruments from different markets |