Correlation Between Calavo Growers and AMCON Distributing

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

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

Diversification Opportunities for Calavo Growers and AMCON Distributing

-0.1

Correlation Coefficient

Calavo Growers  AMCON Distributing

Good diversification

The 3 months correlation between Calavo and AMCON is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Calavo Growers i.e., Calavo Growers and AMCON Distributing go up and down completely randomly.

Pair Corralation between Calavo Growers and AMCON Distributing

Given the investment horizon of 90 days Calavo Growers is expected to generate 0.63 times more return on investment than AMCON Distributing. However, Calavo Growers is 1.59 times less risky than AMCON Distributing. It trades about -0.01 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.02 per unit of risk. If you would invest  2,529  in Calavo Growers on December 28, 2024 and sell it today you would lose (79.00) from holding Calavo Growers or give up 3.12% of portfolio value over 90 days.

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

Calavo Growers  vs.  AMCON Distributing

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.

AMCON Distributing

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Calavo Growers and AMCON Distributing

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

The idea behind Calavo Growers and AMCON Distributing 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.