Correlation Between Village Farms and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Village Farms and SalMar ASA 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 Village Farms and SalMar ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Village Farms International and SalMar ASA, you can compare the effects of market volatilities on Village Farms and SalMar ASA 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 Village Farms with a short position of SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Village Farms and SalMar ASA.
Diversification Opportunities for Village Farms and SalMar ASA
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Village and SalMar is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Village Farms International and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA and Village Farms 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 Village Farms International are associated (or correlated) with SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Village Farms i.e., Village Farms and SalMar ASA go up and down completely randomly.
Pair Corralation between Village Farms and SalMar ASA
Considering the 90-day investment horizon Village Farms International is expected to under-perform the SalMar ASA. In addition to that, Village Farms is 1.28 times more volatile than SalMar ASA. It trades about -0.12 of its total potential returns per unit of risk. SalMar ASA is currently generating about -0.02 per unit of volatility. If you would invest 1,323 in SalMar ASA on August 28, 2024 and sell it today you would lose (32.00) from holding SalMar ASA or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Village Farms International vs. SalMar ASA
Performance |
| Timeline |
| Village Farms Intern |
| SalMar ASA |
Village Farms and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Village Farms and SalMar ASA
The main advantage of trading using opposite Village Farms and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Farms position performs unexpectedly, SalMar ASA 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 SalMar ASA will offset losses from the drop in SalMar ASA's long position.| Village Farms vs. Lancaster Colony | Village Farms vs. Treehouse Foods | Village Farms vs. John B Sanfilippo | Village Farms vs. Seneca Foods Corp |
| SalMar ASA vs. SLC Agricola SA | SalMar ASA vs. Cal Maine Foods | SalMar ASA vs. Bunge Limited | SalMar ASA vs. Austevoll Seafood ASA |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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