Correlation Between Local Bounti and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Local Bounti and SalMar ASA 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 SalMar ASA 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 SalMar ASA, you can compare the effects of market volatilities on Local Bounti and SalMar ASA 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 SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Local Bounti and SalMar ASA.
Diversification Opportunities for Local Bounti and SalMar ASA
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Local and SalMar is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Local Bounti Corp and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Local Bounti i.e., Local Bounti and SalMar ASA go up and down completely randomly.
Pair Corralation between Local Bounti and SalMar ASA
Given the investment horizon of 90 days Local Bounti Corp is expected to under-perform the SalMar ASA. In addition to that, Local Bounti is 1.45 times more volatile than SalMar ASA. It trades about -0.15 of its total potential returns per unit of risk. SalMar ASA is currently generating about 0.01 per unit of volatility. If you would invest 1,347 in SalMar ASA on August 28, 2024 and sell it today you would lose (18.00) from holding SalMar ASA or give up 1.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Local Bounti Corp vs. SalMar ASA
Performance |
| Timeline |
| Local Bounti Corp |
| SalMar ASA |
Local Bounti and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Local Bounti and SalMar ASA
The main advantage of trading using opposite Local Bounti and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Local Bounti position performs unexpectedly, SalMar ASA 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 SalMar ASA will offset losses from the drop in SalMar ASA'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 |
| SalMar ASA vs. SLC Agricola SA | SalMar ASA vs. Cal Maine Foods | SalMar ASA vs. Bunge Limited | SalMar ASA vs. Austevoll Seafood ASA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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