Correlation Between Alico and Dole PLC

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

By analyzing existing cross correlation between Alico Inc and Dole PLC, you can compare the effects of market volatilities on Alico and Dole PLC 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 Alico with a short position of Dole PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alico and Dole PLC.

Diversification Opportunities for Alico and Dole PLC

0.22

Correlation Coefficient

Alico  Dole PLC

Modest diversification

The 1 month correlation between Alico and Dole is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alico Inc and Dole PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dole PLC and Alico 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 Alico Inc are associated (or correlated) with Dole PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dole PLC has no effect on the direction of Alico i.e., Alico and Dole PLC go up and down completely randomly.

Pair Corralation between Alico and Dole PLC

Given the investment horizon of 90 days Alico is expected to generate 4.06 times less return on investment than Dole PLC. In addition to that, Alico is 1.24 times more volatile than Dole PLC. It trades about 0.01 of its total potential returns per unit of risk. Dole PLC is currently generating about 0.06 per unit of volatility. If you would invest  1,132  in Dole PLC on February 9, 2024 and sell it today you would earn a total of  110.00  from holding Dole PLC or generate 9.72% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.18%
Values	Daily Returns

Alico Inc  vs.  Dole PLC

Alico Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alico Inc 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 fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Dole PLC

Risk-Adjusted Performance

20 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dole PLC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Dole PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alico and Dole PLC

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

The idea behind Alico Inc and Dole PLC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.