Correlation Between Arcadia Biosciences and Limoneira

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

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

Diversification Opportunities for Arcadia Biosciences and Limoneira

-0.45

Correlation Coefficient

Arcadia Biosciences  Limoneira

Very good diversification

The 3 months correlation between Arcadia and Limoneira is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arcadia Biosciences and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira and Arcadia Biosciences 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 Arcadia Biosciences are associated (or correlated) with Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Arcadia Biosciences i.e., Arcadia Biosciences and Limoneira go up and down completely randomly.

Pair Corralation between Arcadia Biosciences and Limoneira

Given the investment horizon of 90 days Arcadia Biosciences is expected to under-perform the Limoneira. In addition to that, Arcadia Biosciences is 2.77 times more volatile than Limoneira Co. It trades about -0.13 of its total potential returns per unit of risk. Limoneira Co is currently generating about -0.23 per unit of volatility. If you would invest  2,487  in Limoneira Co on October 25, 2024 and sell it today you would lose (240.00) from holding Limoneira Co or give up 9.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Arcadia Biosciences  vs.  Limoneira Co

Arcadia Biosciences

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arcadia Biosciences are ranked lower than 4 (%) 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.

Limoneira

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Arcadia Biosciences and Limoneira

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

The idea behind Arcadia Biosciences and Limoneira Co 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.