Correlation Between Lavoro Limited and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both Lavoro Limited and Westrock Coffee 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 Lavoro Limited and Westrock Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lavoro Limited Class and Westrock Coffee, you can compare the effects of market volatilities on Lavoro Limited and Westrock Coffee 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 Lavoro Limited with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lavoro Limited and Westrock Coffee.
Diversification Opportunities for Lavoro Limited and Westrock Coffee
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lavoro and Westrock is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lavoro Limited Class and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and Lavoro Limited 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 Lavoro Limited Class are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Lavoro Limited i.e., Lavoro Limited and Westrock Coffee go up and down completely randomly.
Pair Corralation between Lavoro Limited and Westrock Coffee
Given the investment horizon of 90 days Lavoro Limited Class is expected to generate 1.59 times more return on investment than Westrock Coffee. However, Lavoro Limited is 1.59 times more volatile than Westrock Coffee. It trades about 0.03 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.06 per unit of risk. If you would invest 493.00 in Lavoro Limited Class on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Lavoro Limited Class or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lavoro Limited Class vs. Westrock Coffee
Performance |
| Timeline |
| Lavoro Limited Class |
| Westrock Coffee |
Lavoro Limited and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lavoro Limited and Westrock Coffee
The main advantage of trading using opposite Lavoro Limited and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lavoro Limited position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.| Lavoro Limited vs. HF Sinclair Corp | Lavoro Limited vs. Finnair Oyj | Lavoro Limited vs. Fair Isaac | Lavoro Limited vs. Wizz Air Holdings |
| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
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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