Correlation Between Tejon Ranch and 1847 Holdings

Can any of the company-specific risk be diversified away by investing in both Tejon Ranch and 1847 Holdings 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 Tejon Ranch and 1847 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tejon Ranch Co and 1847 Holdings LLC, you can compare the effects of market volatilities on Tejon Ranch and 1847 Holdings 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 Tejon Ranch with a short position of 1847 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tejon Ranch and 1847 Holdings.

Diversification Opportunities for Tejon Ranch and 1847 Holdings

0.56

Correlation Coefficient

Tejon Ranch  1847 Holdings

Very weak diversification

The 3 months correlation between Tejon and 1847 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tejon Ranch Co and 1847 Holdings LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1847 Holdings LLC and Tejon Ranch 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 Tejon Ranch Co are associated (or correlated) with 1847 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1847 Holdings LLC has no effect on the direction of Tejon Ranch i.e., Tejon Ranch and 1847 Holdings go up and down completely randomly.

Pair Corralation between Tejon Ranch and 1847 Holdings

Considering the 90-day investment horizon Tejon Ranch Co is expected to under-perform the 1847 Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Tejon Ranch Co is 27.85 times less risky than 1847 Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The 1847 Holdings LLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  152,100  in 1847 Holdings LLC on September 17, 2024 and sell it today you would lose (152,074) from holding 1847 Holdings LLC or give up 99.98% of portfolio value over 90 days.

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

Tejon Ranch Co  vs.  1847 Holdings LLC

Tejon Ranch

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tejon Ranch Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

1847 Holdings LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1847 Holdings LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Tejon Ranch and 1847 Holdings

The main advantage of trading using opposite Tejon Ranch and 1847 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tejon Ranch position performs unexpectedly, 1847 Holdings 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 1847 Holdings will offset losses from the drop in 1847 Holdings' long position.

The idea behind Tejon Ranch Co and 1847 Holdings LLC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.