Correlation Between Fresh Grapes and Premium Brands

Can any of the company-specific risk be diversified away by investing in both Fresh Grapes and Premium Brands 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 Premium Brands 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 Premium Brands Holdings, you can compare the effects of market volatilities on Fresh Grapes and Premium Brands 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 Premium Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Grapes and Premium Brands.

Diversification Opportunities for Fresh Grapes and Premium Brands

0.77

Correlation Coefficient

Fresh Grapes  Premium Brands

Poor diversification

The 3 months correlation between Fresh and Premium is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and Premium Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Brands Holdings 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 Premium Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Brands Holdings has no effect on the direction of Fresh Grapes i.e., Fresh Grapes and Premium Brands go up and down completely randomly.

Pair Corralation between Fresh Grapes and Premium Brands

Given the investment horizon of 90 days Fresh Grapes LLC is expected to under-perform the Premium Brands. In addition to that, Fresh Grapes is 3.66 times more volatile than Premium Brands Holdings. It trades about -0.12 of its total potential returns per unit of risk. Premium Brands Holdings is currently generating about -0.02 per unit of volatility. If you would invest  5,602  in Premium Brands Holdings on September 29, 2024 and sell it today you would lose (68.00) from holding Premium Brands Holdings or give up 1.21% of portfolio value over 90 days.

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

Fresh Grapes LLC  vs.  Premium Brands Holdings

Fresh Grapes LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresh Grapes LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Premium Brands Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Brands Holdings 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 basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fresh Grapes and Premium Brands

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

The idea behind Fresh Grapes LLC and Premium Brands Holdings 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.