Correlation Between Edible Garden and Usio

Can any of the company-specific risk be diversified away by investing in both Edible Garden and Usio 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 Usio 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 Usio Inc, you can compare the effects of market volatilities on Edible Garden and Usio 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 Usio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and Usio.

Diversification Opportunities for Edible Garden and Usio

0.09

Correlation Coefficient

Edible Garden  Usio

Significant diversification

The 3 months correlation between Edible and Usio is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Usio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usio Inc 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 Usio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usio Inc has no effect on the direction of Edible Garden i.e., Edible Garden and Usio go up and down completely randomly.

Pair Corralation between Edible Garden and Usio

Given the investment horizon of 90 days Edible Garden AG is expected to under-perform the Usio. In addition to that, Edible Garden is 2.87 times more volatile than Usio Inc. It trades about -0.08 of its total potential returns per unit of risk. Usio Inc is currently generating about 0.0 per unit of volatility. If you would invest  198.00  in Usio Inc on October 5, 2024 and sell it today you would lose (49.00) from holding Usio Inc or give up 24.75% of portfolio value over 90 days.

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

Edible Garden AG  vs.  Usio Inc

Edible Garden AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 8 (%) 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.

Usio Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Usio Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Usio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Edible Garden and Usio

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

The idea behind Edible Garden AG and Usio 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.