Correlation Between SW Seed and Limoneira
Can any of the company-specific risk be diversified away by investing in both SW Seed and Limoneira 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 SW Seed and Limoneira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SW Seed Company and Limoneira Co, you can compare the effects of market volatilities on SW Seed and Limoneira 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 SW Seed with a short position of Limoneira. Check out your portfolio center. Please also check ongoing floating volatility patterns of SW Seed and Limoneira.
Diversification Opportunities for SW Seed and Limoneira
Excellent diversification
The 3 months correlation between SANW and Limoneira is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SW Seed Company and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira and SW Seed 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 SW Seed Company are associated (or correlated) with Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of SW Seed i.e., SW Seed and Limoneira go up and down completely randomly.
Pair Corralation between SW Seed and Limoneira
Given the investment horizon of 90 days SW Seed Company is expected to under-perform the Limoneira. In addition to that, SW Seed is 2.86 times more volatile than Limoneira Co. It trades about -0.01 of its total potential returns per unit of risk. Limoneira Co is currently generating about 0.08 per unit of volatility. If you would invest 1,282 in Limoneira Co on August 24, 2024 and sell it today you would earn a total of 1,467 from holding Limoneira Co or generate 114.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SW Seed Company vs. Limoneira Co
Performance |
| Timeline |
| SW Seed Company |
| Limoneira |
SW Seed and Limoneira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SW Seed and Limoneira
The main advantage of trading using opposite SW Seed and Limoneira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SW Seed position performs unexpectedly, Limoneira 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 Limoneira will offset losses from the drop in Limoneira's long position.The idea behind SW Seed Company and Limoneira Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Limoneira vs. Alico Inc | Limoneira vs. SW Seed Company | Limoneira vs. Adecoagro SA | Limoneira vs. Tyson 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |