Correlation Between Farmer Bros and Flowers Foods
Can any of the company-specific risk be diversified away by investing in both Farmer Bros and Flowers Foods 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 Flowers Foods 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 Flowers Foods, you can compare the effects of market volatilities on Farmer Bros and Flowers Foods 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 Flowers Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmer Bros and Flowers Foods.
Diversification Opportunities for Farmer Bros and Flowers Foods
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Farmer and Flowers is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Farmer Bros Co and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers Foods 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 Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of Farmer Bros i.e., Farmer Bros and Flowers Foods go up and down completely randomly.
Pair Corralation between Farmer Bros and Flowers Foods
Given the investment horizon of 90 days Farmer Bros Co is expected to under-perform the Flowers Foods. In addition to that, Farmer Bros is 3.94 times more volatile than Flowers Foods. It trades about -0.01 of its total potential returns per unit of risk. Flowers Foods is currently generating about -0.02 per unit of volatility. If you would invest 2,687 in Flowers Foods on September 2, 2024 and sell it today you would lose (425.00) from holding Flowers Foods or give up 15.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmer Bros Co vs. Flowers Foods
Performance |
| Timeline |
| Farmer Bros |
| Flowers Foods |
Farmer Bros and Flowers Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmer Bros and Flowers Foods
The main advantage of trading using opposite Farmer Bros and Flowers Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmer Bros position performs unexpectedly, Flowers Foods 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 Flowers Foods will offset losses from the drop in Flowers Foods' long position.| Farmer Bros vs. Bridgford Foods | Farmer Bros vs. Seneca Foods Corp | Farmer Bros vs. Lifeway Foods | Farmer Bros vs. J J Snack |
| Flowers Foods vs. ConAgra Foods | Flowers Foods vs. McCormick Company Incorporated | Flowers Foods vs. Campbell Soup | Flowers Foods vs. Kellanova |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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