Correlation Between Laird Superfood and Arcadia Biosciences

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

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

Diversification Opportunities for Laird Superfood and Arcadia Biosciences

-0.18

Correlation Coefficient

Laird Superfood  Arcadia Biosciences

Good diversification

The 3 months correlation between Laird and Arcadia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Laird Superfood and Arcadia Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadia Biosciences and Laird Superfood 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 Laird Superfood 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 Laird Superfood i.e., Laird Superfood and Arcadia Biosciences go up and down completely randomly.

Pair Corralation between Laird Superfood and Arcadia Biosciences

Considering the 90-day investment horizon Laird Superfood is expected to under-perform the Arcadia Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Laird Superfood is 3.05 times less risky than Arcadia Biosciences. The stock trades about -0.11 of its potential returns per unit of risk. The Arcadia Biosciences is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  275.00  in Arcadia Biosciences on December 1, 2024 and sell it today you would earn a total of  116.00  from holding Arcadia Biosciences or generate 42.18% return on investment over 90 days.

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

Laird Superfood  vs.  Arcadia Biosciences

Laird Superfood

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laird Superfood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Arcadia Biosciences

Risk-Adjusted Performance

Modest

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

Pair Trading with Laird Superfood and Arcadia Biosciences

The main advantage of trading using opposite Laird Superfood and Arcadia Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laird Superfood 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 Laird Superfood 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.