Correlation Between Whole Earth and Arcadia Biosciences

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

By analyzing existing cross correlation between Whole Earth Brands and Arcadia Biosciences, you can compare the effects of market volatilities on Whole Earth and Arcadia Biosciences 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 Whole Earth with a short position of Arcadia Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whole Earth and Arcadia Biosciences.

Diversification Opportunities for Whole Earth and Arcadia Biosciences

0.39

Correlation Coefficient

Whole Earth  Arcadia Biosciences

Weak diversification

The 3 months correlation between Whole and Arcadia is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Whole Earth Brands and Arcadia Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadia Biosciences and Whole Earth 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 Whole Earth Brands are associated (or correlated) with Arcadia Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadia Biosciences has no effect on the direction of Whole Earth i.e., Whole Earth and Arcadia Biosciences go up and down completely randomly.

Pair Corralation between Whole Earth and Arcadia Biosciences

If you would invest  286.00  in Arcadia Biosciences on September 4, 2024 and sell it today you would lose (11.00) from holding Arcadia Biosciences or give up 3.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Whole Earth Brands  vs.  Arcadia Biosciences

Whole Earth Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whole Earth Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Whole Earth is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Arcadia Biosciences

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arcadia Biosciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Arcadia Biosciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Whole Earth and Arcadia Biosciences

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

The idea behind Whole Earth Brands and Arcadia Biosciences 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.