Correlation Between Real Good and Whole Earth

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

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

Diversification Opportunities for Real Good and Whole Earth

0.0

Correlation Coefficient

Real Good  Whole Earth

Pay attention - limited upside

The 3 months correlation between Real and Whole is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Real Good Food and Whole Earth Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whole Earth Brands and Real Good 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 Real Good Food are associated (or correlated) with Whole Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whole Earth Brands has no effect on the direction of Real Good i.e., Real Good and Whole Earth go up and down completely randomly.

Pair Corralation between Real Good and Whole Earth

If you would invest  309.00  in Real Good Food on December 27, 2024 and sell it today you would lose (295.00) from holding Real Good Food or give up 95.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Real Good Food  vs.  Whole Earth Brands

Real Good Food

Risk-Adjusted Performance

OK

Over the last 90 days Real Good Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical and fundamental indicators, Real Good reported solid returns over the last few months and may actually be approaching a breakup point.

Whole Earth Brands

Risk-Adjusted Performance

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.

Pair Trading with Real Good and Whole Earth

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

The idea behind Real Good Food and Whole Earth Brands 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.