Correlation Between Mission Produce and Calavo Growers

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

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

Diversification Opportunities for Mission Produce and Calavo Growers

0.53

Correlation Coefficient

Mission Produce  Calavo Growers

Very weak diversification

The 3 months correlation between Mission and Calavo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mission Produce and Calavo Growers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calavo Growers and Mission Produce 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 Mission Produce 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 Mission Produce i.e., Mission Produce and Calavo Growers go up and down completely randomly.

Pair Corralation between Mission Produce and Calavo Growers

Considering the 90-day investment horizon Mission Produce is expected to under-perform the Calavo Growers. But the stock apears to be less risky and, when comparing its historical volatility, Mission Produce is 1.07 times less risky than Calavo Growers. The stock trades about -0.21 of its potential returns per unit of risk. The Calavo Growers is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,529  in Calavo Growers on December 29, 2024 and sell it today you would lose (107.00) from holding Calavo Growers or give up 4.23% of portfolio value over 90 days.

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

Mission Produce  vs.  Calavo Growers

Mission Produce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mission Produce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Calavo Growers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calavo Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Calavo Growers is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mission Produce and Calavo Growers

The main advantage of trading using opposite Mission Produce and Calavo Growers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mission Produce 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 Mission Produce 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..