Correlation Between Local Bounti and AppHarvest
Can any of the company-specific risk be diversified away by investing in both Local Bounti and AppHarvest 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 Local Bounti and AppHarvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Local Bounti Corp and AppHarvest, you can compare the effects of market volatilities on Local Bounti and AppHarvest 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 Local Bounti with a short position of AppHarvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Local Bounti and AppHarvest.
Diversification Opportunities for Local Bounti and AppHarvest
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Local and AppHarvest is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Local Bounti Corp and AppHarvest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AppHarvest and Local Bounti 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 Local Bounti Corp are associated (or correlated) with AppHarvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AppHarvest has no effect on the direction of Local Bounti i.e., Local Bounti and AppHarvest go up and down completely randomly.
Pair Corralation between Local Bounti and AppHarvest
Given the investment horizon of 90 days Local Bounti Corp is expected to generate 0.8 times more return on investment than AppHarvest. However, Local Bounti Corp is 1.26 times less risky than AppHarvest. It trades about -0.02 of its potential returns per unit of risk. AppHarvest is currently generating about -0.07 per unit of risk. If you would invest 1,560 in Local Bounti Corp on August 31, 2024 and sell it today you would lose (1,386) from holding Local Bounti Corp or give up 88.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 28.51% |
| Values | Daily Returns |
Local Bounti Corp vs. AppHarvest
Performance |
| Timeline |
| Local Bounti Corp |
| AppHarvest |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Local Bounti and AppHarvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Local Bounti and AppHarvest
The main advantage of trading using opposite Local Bounti and AppHarvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Local Bounti position performs unexpectedly, AppHarvest 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 AppHarvest will offset losses from the drop in AppHarvest's long position.| Local Bounti vs. Fresh Del Monte | Local Bounti vs. Alico Inc | Local Bounti vs. SW Seed Company | Local Bounti vs. Adecoagro SA |
| AppHarvest vs. Porch Group | AppHarvest vs. Hydrofarm Holdings Group | AppHarvest vs. Danimer Scientific | AppHarvest vs. Open Lending Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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