Correlation Between Dole PLC and Healthy Choice

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

By analyzing existing cross correlation between Dole PLC and Healthy Choice Wellness, you can compare the effects of market volatilities on Dole PLC and Healthy Choice 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 Healthy Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dole PLC and Healthy Choice.

Diversification Opportunities for Dole PLC and Healthy Choice

0.63

Correlation Coefficient

Dole PLC  Healthy Choice

Poor diversification

The 3 months correlation between Dole and Healthy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC and Healthy Choice Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthy Choice Wellness 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 Healthy Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthy Choice Wellness has no effect on the direction of Dole PLC i.e., Dole PLC and Healthy Choice go up and down completely randomly.

Pair Corralation between Dole PLC and Healthy Choice

Given the investment horizon of 90 days Dole PLC is expected to under-perform the Healthy Choice. But the stock apears to be less risky and, when comparing its historical volatility, Dole PLC is 14.23 times less risky than Healthy Choice. The stock trades about -0.12 of its potential returns per unit of risk. The Healthy Choice Wellness is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Healthy Choice Wellness on October 22, 2024 and sell it today you would earn a total of  36.00  from holding Healthy Choice Wellness or generate 41.38% return on investment over 90 days.

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

Dole PLC  vs.  Healthy Choice Wellness

Dole PLC

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Healthy Choice Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthy Choice Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Healthy Choice is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dole PLC and Healthy Choice

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

The idea behind Dole PLC and Healthy Choice Wellness 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.