Correlation Between Alto Ingredients and Oil Dri

Can any of the company-specific risk be diversified away by investing in both Alto Ingredients and Oil Dri 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 Alto Ingredients and Oil Dri into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Alto Ingredients and Oil Dri

-0.09

Correlation Coefficient

Alto Ingredients  Oil Dri

Good diversification

The 3 months correlation between Alto and Oil is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alto Ingredients and Oil Dri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Dri and Alto Ingredients 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 Alto Ingredients are associated (or correlated) with Oil Dri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Dri has no effect on the direction of Alto Ingredients i.e., Alto Ingredients and Oil Dri go up and down completely randomly.

Pair Corralation between Alto Ingredients and Oil Dri

Given the investment horizon of 90 days Alto Ingredients is expected to generate 0.34 times more return on investment than Oil Dri. However, Alto Ingredients is 2.92 times less risky than Oil Dri. It trades about 0.27 of its potential returns per unit of risk. Oil Dri is currently generating about -0.12 per unit of risk. If you would invest  149.00  in Alto Ingredients on October 9, 2024 and sell it today you would earn a total of  34.00  from holding Alto Ingredients or generate 22.82% return on investment over 90 days.

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

Alto Ingredients  vs.  Oil Dri

Alto Ingredients

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alto Ingredients are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Alto Ingredients displayed solid returns over the last few months and may actually be approaching a breakup point.

Oil Dri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Dri has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alto Ingredients and Oil Dri

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

The idea behind Alto Ingredients and Oil Dri 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.