Correlation Between Mission Produce and Consumer Staples

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

By analyzing existing cross correlation between Mission Produce and Consumer Staples Portfolio, you can compare the effects of market volatilities on Mission Produce and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mission Produce and Consumer Staples.

Diversification Opportunities for Mission Produce and Consumer Staples

-0.24

Correlation Coefficient

Mission Produce  Consumer Staples

Very good diversification

The 3 months correlation between Mission and Consumer is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mission Produce and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Mission Produce i.e., Mission Produce and Consumer Staples go up and down completely randomly.

Pair Corralation between Mission Produce and Consumer Staples

Considering the 90-day investment horizon Mission Produce is expected to generate 3.22 times more return on investment than Consumer Staples. However, Mission Produce is 3.22 times more volatile than Consumer Staples Portfolio. It trades about 0.04 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about -0.2 per unit of risk. If you would invest  1,198  in Mission Produce on October 24, 2024 and sell it today you would earn a total of  51.00  from holding Mission Produce or generate 4.26% return on investment over 90 days.

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

Mission Produce  vs.  Consumer Staples Portfolio

Mission Produce

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mission Produce are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Mission Produce may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Consumer Staples Por

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consumer Staples Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Mission Produce and Consumer Staples

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

The idea behind Mission Produce and Consumer Staples Portfolio 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.