Correlation Between Aquagold International and Laird Superfood

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

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

Diversification Opportunities for Aquagold International and Laird Superfood

0.65

Correlation Coefficient

Aquagold International  Laird Superfood

Poor diversification

The 3 months correlation between Aquagold and Laird is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood and Aquagold International 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 Aquagold International are associated (or correlated) with Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of Aquagold International i.e., Aquagold International and Laird Superfood go up and down completely randomly.

Pair Corralation between Aquagold International and Laird Superfood

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Laird Superfood. In addition to that, Aquagold International is 1.22 times more volatile than Laird Superfood. It trades about -0.12 of its total potential returns per unit of risk. Laird Superfood is currently generating about -0.02 per unit of volatility. If you would invest  800.00  in Laird Superfood on December 29, 2024 and sell it today you would lose (100.00) from holding Laird Superfood or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Aquagold International  vs.  Laird Superfood

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Laird Superfood

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laird Superfood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Laird Superfood is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aquagold International and Laird Superfood

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

The idea behind Aquagold International and Laird Superfood 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..