Correlation Between Edible Garden and NOVHOL

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

By analyzing existing cross correlation between Edible Garden AG and NOVHOL 875 15 APR 30, you can compare the effects of market volatilities on Edible Garden and NOVHOL 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 Edible Garden with a short position of NOVHOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and NOVHOL.

Diversification Opportunities for Edible Garden and NOVHOL

-0.12

Correlation Coefficient

Edible Garden  NOVHOL

Good diversification

The 3 months correlation between Edible and NOVHOL is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and NOVHOL 875 15 APR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVHOL 875 15 and Edible Garden 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 Edible Garden AG are associated (or correlated) with NOVHOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVHOL 875 15 has no effect on the direction of Edible Garden i.e., Edible Garden and NOVHOL go up and down completely randomly.

Pair Corralation between Edible Garden and NOVHOL

Given the investment horizon of 90 days Edible Garden AG is expected to generate 41.91 times more return on investment than NOVHOL. However, Edible Garden is 41.91 times more volatile than NOVHOL 875 15 APR 30. It trades about 0.12 of its potential returns per unit of risk. NOVHOL 875 15 APR 30 is currently generating about 0.07 per unit of risk. If you would invest  24.00  in Edible Garden AG on October 21, 2024 and sell it today you would earn a total of  4.00  from holding Edible Garden AG or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.47%
Values	Daily Returns

Edible Garden AG  vs.  NOVHOL 875 15 APR 30

Edible Garden AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Edible Garden disclosed solid returns over the last few months and may actually be approaching a breakup point.

NOVHOL 875 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVHOL 875 15 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NOVHOL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Edible Garden and NOVHOL

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

The idea behind Edible Garden AG and NOVHOL 875 15 APR 30 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.