Correlation Between EVI Industries and Mission Produce

Can any of the company-specific risk be diversified away by investing in both EVI Industries and Mission Produce 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 EVI Industries and Mission Produce into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVI Industries and Mission Produce, you can compare the effects of market volatilities on EVI Industries and Mission Produce 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 EVI Industries with a short position of Mission Produce. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVI Industries and Mission Produce.

Diversification Opportunities for EVI Industries and Mission Produce

0.63

Correlation Coefficient

EVI Industries  Mission Produce

Poor diversification

The 3 months correlation between EVI and Mission is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding EVI Industries and Mission Produce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Produce and EVI Industries 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 EVI Industries are associated (or correlated) with Mission Produce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Produce has no effect on the direction of EVI Industries i.e., EVI Industries and Mission Produce go up and down completely randomly.

Pair Corralation between EVI Industries and Mission Produce

Considering the 90-day investment horizon EVI Industries is expected to generate 2.0 times more return on investment than Mission Produce. However, EVI Industries is 2.0 times more volatile than Mission Produce. It trades about 0.06 of its potential returns per unit of risk. Mission Produce is currently generating about -0.01 per unit of risk. If you would invest  1,073  in EVI Industries on January 20, 2024 and sell it today you would earn a total of  1,071  from holding EVI Industries or generate 99.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

EVI Industries  vs.  Mission Produce

EVI Industries

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days EVI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, EVI Industries is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Mission Produce

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mission Produce are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Mission Produce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EVI Industries and Mission Produce

The main advantage of trading using opposite EVI Industries and Mission Produce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVI Industries position performs unexpectedly, Mission Produce 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 Mission Produce will offset losses from the drop in Mission Produce's long position.

The idea behind EVI Industries and Mission Produce 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.