Correlation Between Performance Food and Vital Farms
Can any of the company-specific risk be diversified away by investing in both Performance Food and Vital Farms 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 Performance Food and Vital Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Vital Farms, you can compare the effects of market volatilities on Performance Food and Vital Farms 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 Performance Food with a short position of Vital Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Vital Farms.
Diversification Opportunities for Performance Food and Vital Farms
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Performance and Vital is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Vital Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Farms and Performance Food 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 Performance Food Group are associated (or correlated) with Vital Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Farms has no effect on the direction of Performance Food i.e., Performance Food and Vital Farms go up and down completely randomly.
Pair Corralation between Performance Food and Vital Farms
Given the investment horizon of 90 days Performance Food is expected to generate 1.77 times less return on investment than Vital Farms. But when comparing it to its historical volatility, Performance Food Group is 2.76 times less risky than Vital Farms. It trades about 0.39 of its potential returns per unit of risk. Vital Farms is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,884 in Vital Farms on November 3, 2024 and sell it today you would earn a total of 504.00 from holding Vital Farms or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Vital Farms
Performance |
| Timeline |
| Performance Food |
| Vital Farms |
Performance Food and Vital Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Vital Farms
The main advantage of trading using opposite Performance Food and Vital Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Vital Farms 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 Vital Farms will offset losses from the drop in Vital Farms' long position.| Performance Food vs. Sysco | Performance Food vs. The Chefs Warehouse | Performance Food vs. United Natural Foods | Performance Food vs. Calavo Growers |
| Vital Farms vs. Fresh Del Monte | Vital Farms vs. Alico Inc | Vital Farms vs. SW Seed Company | Vital Farms vs. Adecoagro SA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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