Correlation Between Fresh Del and Dole PLC

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

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

Diversification Opportunities for Fresh Del and Dole PLC

0.8

Correlation Coefficient

Fresh Del  Dole PLC

Very poor diversification

The 3 months correlation between Fresh and Dole is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Del Monte and Dole PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dole PLC and Fresh Del 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 Del Monte 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 Fresh Del i.e., Fresh Del and Dole PLC go up and down completely randomly.

Pair Corralation between Fresh Del and Dole PLC

Considering the 90-day investment horizon Fresh Del Monte is expected to under-perform the Dole PLC. In addition to that, Fresh Del is 1.45 times more volatile than Dole PLC. It trades about -0.15 of its total potential returns per unit of risk. Dole PLC is currently generating about 0.26 per unit of volatility. If you would invest  1,173  in Dole PLC on February 9, 2024 and sell it today you would earn a total of  69.00  from holding Dole PLC or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Fresh Del Monte  vs.  Dole PLC

Fresh Del Monte

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Fresh Del is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Dole PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dole PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Dole PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresh Del and Dole PLC

The main advantage of trading using opposite Fresh Del and Dole PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresh Del 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 Fresh Del Monte 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.