Correlation Between Limoneira and Rev

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

By analyzing existing cross correlation between Limoneira Co and Rev Group, you can compare the effects of market volatilities on Limoneira and Rev 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 Limoneira with a short position of Rev. Check out your portfolio center. Please also check ongoing floating volatility patterns of Limoneira and Rev.

Diversification Opportunities for Limoneira and Rev

0.17

Correlation Coefficient

Limoneira  Rev

Average diversification

The 3 months correlation between Limoneira and Rev is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Limoneira Co and Rev Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rev Group and Limoneira 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 Limoneira Co are associated (or correlated) with Rev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rev Group has no effect on the direction of Limoneira i.e., Limoneira and Rev go up and down completely randomly.

Pair Corralation between Limoneira and Rev

Given the investment horizon of 90 days Limoneira Co is expected to under-perform the Rev. But the stock apears to be less risky and, when comparing its historical volatility, Limoneira Co is 1.12 times less risky than Rev. The stock trades about -0.2 of its potential returns per unit of risk. The Rev Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,132  in Rev Group on December 28, 2024 and sell it today you would earn a total of  198.00  from holding Rev Group or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Limoneira Co  vs.  Rev Group

Limoneira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Rev Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rev Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Rev may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Limoneira and Rev

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

The idea behind Limoneira Co and Rev Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.