Correlation Between Fresh Grapes and Consumer Products

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

Diversification Opportunities for Fresh Grapes and Consumer Products

-0.43

Correlation Coefficient

Fresh Grapes  Consumer Products

Very good diversification

The 3 months correlation between Fresh and Consumer is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products 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 Consumer Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Fresh Grapes i.e., Fresh Grapes and Consumer Products go up and down completely randomly.

Pair Corralation between Fresh Grapes and Consumer Products

Given the investment horizon of 90 days Fresh Grapes LLC is expected to generate 7.9 times more return on investment than Consumer Products. However, Fresh Grapes is 7.9 times more volatile than Consumer Products Fund. It trades about 0.03 of its potential returns per unit of risk. Consumer Products Fund is currently generating about 0.06 per unit of risk. If you would invest  57.00  in Fresh Grapes LLC on December 29, 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 Against
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Fresh Grapes LLC  vs.  Consumer Products Fund

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.

Consumer Products

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Products Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Consumer Products is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fresh Grapes and Consumer Products

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

The idea behind Fresh Grapes LLC and Consumer Products Fund 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.