Correlation Between Calavo Growers and Big Lots

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Can any of the company-specific risk be diversified away by investing in both Calavo Growers and Big Lots 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 Calavo Growers and Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calavo Growers and Big Lots, you can compare the effects of market volatilities on Calavo Growers and Big Lots 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 Calavo Growers with a short position of Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calavo Growers and Big Lots.

Diversification Opportunities for Calavo Growers and Big Lots

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Calavo and Big Lots is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots and Calavo Growers 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 Calavo Growers are associated (or correlated) with Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Calavo Growers i.e., Calavo Growers and Big Lots go up and down completely randomly.

Pair Corralation between Calavo Growers and Big Lots

Given the investment horizon of 90 days Calavo Growers is expected to generate 0.64 times more return on investment than Big Lots. However, Calavo Growers is 1.55 times less risky than Big Lots. It trades about -0.01 of its potential returns per unit of risk. Big Lots is currently generating about -0.06 per unit of risk. If you would invest  3,850  in Calavo Growers on June 30, 2022 and sell it today you would lose (571.00)  from holding Calavo Growers or give up 14.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Calavo Growers  vs.  Big Lots

 Performance (%) 
       Timeline  
Calavo Growers 
Calavo Performance
0 of 100
Over the last 90 days Calavo Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in October 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Calavo Price Channel

Big Lots 
Big Lots Performance
0 of 100
Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Big Lots is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Big Lots Price Channel

Calavo Growers and Big Lots Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Calavo Growers and Big Lots

The main advantage of trading using opposite Calavo Growers and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calavo Growers position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.
Calavo Growers vs. Clearwater Paper Corp
The idea behind Calavo Growers and Big Lots 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.
Big Lots vs. Kibush Capital Corp
Check out your portfolio center. 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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