Correlation Between Coffee Holding and Local Bounti
Can any of the company-specific risk be diversified away by investing in both Coffee Holding 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 Coffee Holding and Local Bounti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Holding Co and Local Bounti Corp, you can compare the effects of market volatilities on Coffee Holding 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 Coffee Holding with a short position of Local Bounti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Local Bounti.
Diversification Opportunities for Coffee Holding and Local Bounti
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coffee and Local is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co 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 Coffee Holding 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 Coffee Holding Co 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 Coffee Holding i.e., Coffee Holding and Local Bounti go up and down completely randomly.
Pair Corralation between Coffee Holding and Local Bounti
Considering the 90-day investment horizon Coffee Holding Co is expected to generate 1.0 times more return on investment than Local Bounti. However, Coffee Holding is 1.0 times more volatile than Local Bounti Corp. It trades about 0.02 of its potential returns per unit of risk. Local Bounti Corp is currently generating about -0.02 per unit of risk. If you would invest 394.00 in Coffee Holding Co on November 5, 2024 and sell it today you would earn a total of 1.00 from holding Coffee Holding Co or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. Local Bounti Corp
Performance |
| Timeline |
| Coffee Holding |
| Local Bounti Corp |
Coffee Holding and Local Bounti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Local Bounti
The main advantage of trading using opposite Coffee Holding and Local Bounti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding 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.| Coffee Holding vs. Seneca Foods Corp | Coffee Holding vs. J J Snack | Coffee Holding vs. Aryzta AG PK | Coffee Holding vs. Lifeway Foods |
| Local Bounti vs. Fresh Del Monte | Local Bounti vs. Alico Inc | Local Bounti vs. SW Seed Company | Local Bounti vs. Adecoagro SA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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