Correlation Between Local Bounti and Clean Seas
Can any of the company-specific risk be diversified away by investing in both Local Bounti and Clean Seas 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 Clean Seas 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 Clean Seas Seafood, you can compare the effects of market volatilities on Local Bounti and Clean Seas 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 Clean Seas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Local Bounti and Clean Seas.
Diversification Opportunities for Local Bounti and Clean Seas
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Local and Clean is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Local Bounti Corp and Clean Seas Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Seas Seafood 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 Clean Seas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Seas Seafood has no effect on the direction of Local Bounti i.e., Local Bounti and Clean Seas go up and down completely randomly.
Pair Corralation between Local Bounti and Clean Seas
Given the investment horizon of 90 days Local Bounti Corp is expected to generate 1.81 times more return on investment than Clean Seas. However, Local Bounti is 1.81 times more volatile than Clean Seas Seafood. It trades about 0.05 of its potential returns per unit of risk. Clean Seas Seafood is currently generating about -0.05 per unit of risk. If you would invest 124.00 in Local Bounti Corp on August 25, 2024 and sell it today you would earn a total of 43.00 from holding Local Bounti Corp or generate 34.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Local Bounti Corp vs. Clean Seas Seafood
Performance |
| Timeline |
| Local Bounti Corp |
| Clean Seas Seafood |
Local Bounti and Clean Seas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Local Bounti and Clean Seas
The main advantage of trading using opposite Local Bounti and Clean Seas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Local Bounti position performs unexpectedly, Clean Seas 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 Clean Seas will offset losses from the drop in Clean Seas' long position.| Local Bounti vs. Fresh Del Monte | Local Bounti vs. Alico Inc | Local Bounti vs. SW Seed Company | Local Bounti vs. Adecoagro SA |
| Clean Seas vs. Avi Ltd ADR | Clean Seas vs. Altavoz Entertainment | Clean Seas vs. The a2 Milk | Clean Seas vs. Aryzta AG PK |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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