Correlation Between Alico and Local Bounti

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

By analyzing existing cross correlation between Alico Inc and Local Bounti Corp, you can compare the effects of market volatilities on Alico and Local Bounti 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 Local Bounti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alico and Local Bounti.

Diversification Opportunities for Alico and Local Bounti

0.34

Correlation Coefficient

Alico  Local Bounti

Weak diversification

The 3 months correlation between Alico and Local is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alico Inc and Local Bounti Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Local Bounti Corp 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 Local Bounti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Local Bounti Corp has no effect on the direction of Alico i.e., Alico and Local Bounti go up and down completely randomly.

Pair Corralation between Alico and Local Bounti

Given the investment horizon of 90 days Alico is expected to generate 2.02 times less return on investment than Local Bounti. But when comparing it to its historical volatility, Alico Inc is 4.71 times less risky than Local Bounti. It trades about 0.12 of its potential returns per unit of risk. Local Bounti Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Local Bounti Corp on May 5, 2025 and sell it today you would earn a total of  23.00  from holding Local Bounti Corp or generate 9.2% return on investment over 90 days.

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

Alico Inc  vs.  Local Bounti Corp

Alico Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alico Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Alico may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Local Bounti Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Local Bounti Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Local Bounti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alico and Local Bounti

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

The idea behind Alico Inc and Local Bounti Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.