Correlation Between Local Bounti and Global Clean
Can any of the company-specific risk be diversified away by investing in both Local Bounti and Global Clean 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 Global Clean 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 Global Clean Energy, you can compare the effects of market volatilities on Local Bounti and Global Clean 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 Global Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Local Bounti and Global Clean.
Diversification Opportunities for Local Bounti and Global Clean
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Local and Global is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Local Bounti Corp and Global Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Clean Energy 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 Global Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Clean Energy has no effect on the direction of Local Bounti i.e., Local Bounti and Global Clean go up and down completely randomly.
Pair Corralation between Local Bounti and Global Clean
Given the investment horizon of 90 days Local Bounti Corp is expected to under-perform the Global Clean. But the stock apears to be less risky and, when comparing its historical volatility, Local Bounti Corp is 1.63 times less risky than Global Clean. The stock trades about -0.53 of its potential returns per unit of risk. The Global Clean Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 85.00 in Global Clean Energy on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Global Clean Energy or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Local Bounti Corp vs. Global Clean Energy
Performance |
| Timeline |
| Local Bounti Corp |
| Global Clean Energy |
Local Bounti and Global Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Local Bounti and Global Clean
The main advantage of trading using opposite Local Bounti and Global Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Local Bounti position performs unexpectedly, Global Clean 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 Global Clean will offset losses from the drop in Global Clean's long position.| Local Bounti vs. Bellring Brands LLC | Local Bounti vs. Ingredion Incorporated | Local Bounti vs. Nomad Foods | Local Bounti vs. Simply Good Foods |
| Global Clean vs. Edible Garden AG | Global Clean vs. Golden Agri Resources | Global Clean vs. Local Bounti Corp | Global Clean vs. Village Farms International |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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