Correlation Between Andersons and Calavo Growers

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

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

Diversification Opportunities for Andersons and Calavo Growers

0.12

Correlation Coefficient

Andersons  Calavo Growers

Average diversification

The 3 months correlation between Andersons and Calavo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding The Andersons and Calavo Growers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calavo Growers and Andersons 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 The Andersons 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 Andersons i.e., Andersons and Calavo Growers go up and down completely randomly.

Pair Corralation between Andersons and Calavo Growers

Given the investment horizon of 90 days The Andersons is expected to under-perform the Calavo Growers. In addition to that, Andersons is 1.01 times more volatile than Calavo Growers. It trades about -0.03 of its total potential returns per unit of risk. Calavo Growers is currently generating about 0.14 per unit of volatility. If you would invest  2,286  in Calavo Growers on August 30, 2024 and sell it today you would earn a total of  477.00  from holding Calavo Growers or generate 20.87% return on investment over 90 days.

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

The Andersons  vs.  Calavo Growers

Andersons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Andersons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Andersons is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Calavo Growers

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calavo Growers are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Calavo Growers showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Andersons and Calavo Growers

The main advantage of trading using opposite Andersons and Calavo Growers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andersons 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 The Andersons 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.