Correlation Between Fresh Grapes and Australian Oilseeds
Can any of the company-specific risk be diversified away by investing in both Fresh Grapes and Australian Oilseeds 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 Fresh Grapes and Australian Oilseeds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresh Grapes LLC and Australian Oilseeds Holdings, you can compare the effects of market volatilities on Fresh Grapes and Australian Oilseeds 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 Fresh Grapes with a short position of Australian Oilseeds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Grapes and Australian Oilseeds.
Diversification Opportunities for Fresh Grapes and Australian Oilseeds
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fresh and Australian is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and Australian Oilseeds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oilseeds and Fresh Grapes 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 Fresh Grapes LLC are associated (or correlated) with Australian Oilseeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oilseeds has no effect on the direction of Fresh Grapes i.e., Fresh Grapes and Australian Oilseeds go up and down completely randomly.
Pair Corralation between Fresh Grapes and Australian Oilseeds
Given the investment horizon of 90 days Fresh Grapes LLC is expected to generate 2.28 times more return on investment than Australian Oilseeds. However, Fresh Grapes is 2.28 times more volatile than Australian Oilseeds Holdings. It trades about 0.16 of its potential returns per unit of risk. Australian Oilseeds Holdings is currently generating about 0.04 per unit of risk. If you would invest 34.00 in Fresh Grapes LLC on September 2, 2024 and sell it today you would earn a total of 35.00 from holding Fresh Grapes LLC or generate 102.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresh Grapes LLC vs. Australian Oilseeds Holdings
Performance |
| Timeline |
| Fresh Grapes LLC |
| Australian Oilseeds |
Fresh Grapes and Australian Oilseeds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresh Grapes and Australian Oilseeds
The main advantage of trading using opposite Fresh Grapes and Australian Oilseeds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresh Grapes position performs unexpectedly, Australian Oilseeds 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 Australian Oilseeds will offset losses from the drop in Australian Oilseeds' long position.| Fresh Grapes vs. Andrew Peller Limited | Fresh Grapes vs. Naked Wines plc | Fresh Grapes vs. Willamette Valley Vineyards | Fresh Grapes vs. The Tinley Beverage |
| Australian Oilseeds vs. Cimpress NV | Australian Oilseeds vs. Boston Omaha Corp | Australian Oilseeds vs. Xponential Fitness | Australian Oilseeds vs. WPP PLC ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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