Correlation Between Calavo Growers and Mission Produce

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

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

Diversification Opportunities for Calavo Growers and Mission Produce

0.53

Correlation Coefficient

Calavo Growers  Mission Produce

Very weak diversification

The 3 months correlation between Calavo and Mission is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and Mission Produce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Produce and Calavo Growers 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 Calavo Growers are associated (or correlated) with Mission Produce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Produce has no effect on the direction of Calavo Growers i.e., Calavo Growers and Mission Produce go up and down completely randomly.

Pair Corralation between Calavo Growers and Mission Produce

Given the investment horizon of 90 days Calavo Growers is expected to generate 1.07 times more return on investment than Mission Produce. However, Calavo Growers is 1.07 times more volatile than Mission Produce. It trades about -0.01 of its potential returns per unit of risk. Mission Produce is currently generating about -0.21 per unit of risk. 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

Calavo Growers  vs.  Mission Produce

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.

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.

Pair Trading with Calavo Growers and Mission Produce

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

The idea behind Calavo Growers and Mission Produce 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.