Correlation Between SW Seed and Calavo Growers
Can any of the company-specific risk be diversified away by investing in both SW Seed and Calavo Growers 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 Calavo Growers 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 Calavo Growers, you can compare the effects of market volatilities on SW Seed and Calavo Growers 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 Calavo Growers. Check out your portfolio center. Please also check ongoing floating volatility patterns of SW Seed and Calavo Growers.
Diversification Opportunities for SW Seed and Calavo Growers
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between SANW and Calavo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SW Seed Company and Calavo Growers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calavo Growers 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 Calavo Growers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calavo Growers has no effect on the direction of SW Seed i.e., SW Seed and Calavo Growers go up and down completely randomly.
Pair Corralation between SW Seed and Calavo Growers
Given the investment horizon of 90 days SW Seed Company is expected to under-perform the Calavo Growers. In addition to that, SW Seed is 1.66 times more volatile than Calavo Growers. It trades about -0.18 of its total potential returns per unit of risk. Calavo Growers is currently generating about 0.06 per unit of volatility. If you would invest 2,683 in Calavo Growers on February 21, 2024 and sell it today you would earn a total of 62.00 from holding Calavo Growers or generate 2.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SW Seed Company vs. Calavo Growers
Performance |
Timeline |
SW Seed Company |
Calavo Growers |
SW Seed and Calavo Growers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SW Seed and Calavo Growers
The main advantage of trading using opposite SW Seed and Calavo Growers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SW Seed position performs unexpectedly, Calavo Growers 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 Calavo Growers will offset losses from the drop in Calavo Growers' long position.The idea behind SW Seed Company and Calavo Growers 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.Calavo Growers vs. The Chefs Warehouse | Calavo Growers vs. The Andersons | Calavo Growers vs. AMCON Distributing | Calavo Growers vs. Performance Food Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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