Correlation Between Fresh Grapes and Edible Garden

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

By analyzing existing cross correlation between Fresh Grapes LLC and Edible Garden AG, you can compare the effects of market volatilities on Fresh Grapes and Edible Garden 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 Fresh Grapes with a short position of Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Grapes and Edible Garden.

Diversification Opportunities for Fresh Grapes and Edible Garden

0.34

Correlation Coefficient

Fresh Grapes  Edible Garden

Weak diversification

The 3 months correlation between Fresh and Edible is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG and Fresh Grapes 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 Fresh Grapes LLC are associated (or correlated) with Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Fresh Grapes i.e., Fresh Grapes and Edible Garden go up and down completely randomly.

Pair Corralation between Fresh Grapes and Edible Garden

Given the investment horizon of 90 days Fresh Grapes LLC is expected to generate 0.75 times more return on investment than Edible Garden. However, Fresh Grapes LLC is 1.34 times less risky than Edible Garden. It trades about 0.03 of its potential returns per unit of risk. Edible Garden AG is currently generating about -0.09 per unit of risk. If you would invest  57.00  in Fresh Grapes LLC on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Fresh Grapes LLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Fresh Grapes LLC  vs.  Edible Garden AG

Fresh Grapes LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Grapes LLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fresh Grapes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Edible Garden AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edible Garden AG 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 fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Fresh Grapes and Edible Garden

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

The idea behind Fresh Grapes LLC and Edible Garden AG 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.