Correlation Between Fresh Del and CHS

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

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

Diversification Opportunities for Fresh Del and CHS

-0.52

Correlation Coefficient

Fresh Del  CHS

Excellent diversification

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

Pair Corralation between Fresh Del and CHS

Considering the 90-day investment horizon Fresh Del is expected to generate 5.46 times less return on investment than CHS. In addition to that, Fresh Del is 3.52 times more volatile than CHS Inc Pref. It trades about 0.01 of its total potential returns per unit of risk. CHS Inc Pref is currently generating about 0.18 per unit of volatility. If you would invest  2,640  in CHS Inc Pref on December 8, 2024 and sell it today you would earn a total of  37.00  from holding CHS Inc Pref or generate 1.4% return on investment over 90 days.

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

Fresh Del Monte  vs.  CHS Inc Pref

Fresh Del Monte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fresh Del Monte has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

CHS Inc Pref

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHS Inc Pref are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, CHS is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fresh Del and CHS

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

The idea behind Fresh Del Monte and CHS Inc Pref 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.