Correlation Between Dole PLC and Alico

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

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

Diversification Opportunities for Dole PLC and Alico

-0.52

Correlation Coefficient

Dole PLC  Alico

Excellent diversification

The 3 months correlation between Dole and Alico is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc and Dole PLC 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 Dole PLC are associated (or correlated) with Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of Dole PLC i.e., Dole PLC and Alico go up and down completely randomly.

Pair Corralation between Dole PLC and Alico

Given the investment horizon of 90 days Dole PLC is expected to generate 1.08 times more return on investment than Alico. However, Dole PLC is 1.08 times more volatile than Alico Inc. It trades about 0.07 of its potential returns per unit of risk. Alico Inc is currently generating about -0.19 per unit of risk. If you would invest  1,381  in Dole PLC on November 28, 2024 and sell it today you would earn a total of  24.00  from holding Dole PLC or generate 1.74% return on investment over 90 days.

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

Dole PLC  vs.  Alico Inc

Dole PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alico Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alico Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Alico displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dole PLC and Alico

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

The idea behind Dole PLC and Alico Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.