Correlation Between Farmer Bros and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Farmer Bros and Consumer Staples 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 Farmer Bros and Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmer Bros Co and Consumer Staples Portfolio, you can compare the effects of market volatilities on Farmer Bros and Consumer Staples 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 Farmer Bros with a short position of Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmer Bros and Consumer Staples.
Diversification Opportunities for Farmer Bros and Consumer Staples
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Farmer and Consumer is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Farmer Bros Co and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Farmer Bros 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 Farmer Bros Co are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Farmer Bros i.e., Farmer Bros and Consumer Staples go up and down completely randomly.
Pair Corralation between Farmer Bros and Consumer Staples
Given the investment horizon of 90 days Farmer Bros Co is expected to under-perform the Consumer Staples. In addition to that, Farmer Bros is 6.63 times more volatile than Consumer Staples Portfolio. It trades about -0.01 of its total potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.01 per unit of volatility. If you would invest 8,674 in Consumer Staples Portfolio on November 1, 2024 and sell it today you would earn a total of 280.00 from holding Consumer Staples Portfolio or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmer Bros Co vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Farmer Bros |
| Consumer Staples Por |
Farmer Bros and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmer Bros and Consumer Staples
The main advantage of trading using opposite Farmer Bros and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmer Bros position performs unexpectedly, Consumer Staples 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 Staples will offset losses from the drop in Consumer Staples' long position.| Farmer Bros vs. Bridgford Foods | Farmer Bros vs. Seneca Foods Corp | Farmer Bros vs. Lifeway Foods | Farmer Bros vs. SSMTF |
| Consumer Staples vs. Ab Bond Inflation | Consumer Staples vs. Rbc Impact Bond | Consumer Staples vs. Ab Global Bond | Consumer Staples vs. Inflation Adjusted Bond Fund |
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 the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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