Correlation Between Smart For and Arcadia Biosciences

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

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

Diversification Opportunities for Smart For and Arcadia Biosciences

-0.3

Correlation Coefficient

Smart For  Arcadia Biosciences

Very good diversification

The 3 months correlation between Smart and Arcadia is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Smart for Life, and Arcadia Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadia Biosciences and Smart For 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 Smart for Life, 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 Smart For i.e., Smart For and Arcadia Biosciences go up and down completely randomly.

Pair Corralation between Smart For and Arcadia Biosciences

Given the investment horizon of 90 days Smart for Life, is expected to under-perform the Arcadia Biosciences. In addition to that, Smart For is 4.09 times more volatile than Arcadia Biosciences. It trades about -0.42 of its total potential returns per unit of risk. Arcadia Biosciences is currently generating about 0.02 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	28.57%
Values	Daily Returns

Smart for Life,  vs.  Arcadia Biosciences

Smart for Life,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart for Life, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 Smart For and Arcadia Biosciences

The main advantage of trading using opposite Smart For and Arcadia Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart For 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 Smart for Life, 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.