Correlation Between Dole PLC and Scheid Vineyards

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

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

Diversification Opportunities for Dole PLC and Scheid Vineyards

0.67

Correlation Coefficient

Dole PLC  Scheid Vineyards

Poor diversification

The 3 months correlation between Dole and Scheid is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC and Scheid Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scheid Vineyards 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 Scheid Vineyards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scheid Vineyards has no effect on the direction of Dole PLC i.e., Dole PLC and Scheid Vineyards go up and down completely randomly.

Pair Corralation between Dole PLC and Scheid Vineyards

Given the investment horizon of 90 days Dole PLC is expected to generate 1.57 times more return on investment than Scheid Vineyards. However, Dole PLC is 1.57 times more volatile than Scheid Vineyards. It trades about 0.07 of its potential returns per unit of risk. Scheid Vineyards is currently generating about -0.1 per unit of risk. If you would invest  930.00  in Dole PLC on September 13, 2024 and sell it today you would earn a total of  566.00  from holding Dole PLC or generate 60.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.08%
Values	Daily Returns

Dole PLC  vs.  Scheid Vineyards

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 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.

Scheid Vineyards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scheid Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Scheid Vineyards is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dole PLC and Scheid Vineyards

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

The idea behind Dole PLC and Scheid Vineyards 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 Global Correlations module to find global opportunities by holding instruments from different markets.