Correlation Between Vital Farms and CHS
Can any of the company-specific risk be diversified away by investing in both Vital Farms and CHS 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 Vital Farms and CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vital Farms and CHS Inc Pref, you can compare the effects of market volatilities on Vital Farms and CHS 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 Vital Farms with a short position of CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Farms and CHS.
Diversification Opportunities for Vital Farms and CHS
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vital and CHS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and CHS Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc Pref and Vital 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 Vital Farms are associated (or correlated) with CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc Pref has no effect on the direction of Vital Farms i.e., Vital Farms and CHS go up and down completely randomly.
Pair Corralation between Vital Farms and CHS
Given the investment horizon of 90 days Vital Farms is expected to generate 4.81 times more return on investment than CHS. However, Vital Farms is 4.81 times more volatile than CHS Inc Pref. It trades about -0.02 of its potential returns per unit of risk. CHS Inc Pref is currently generating about -0.22 per unit of risk. If you would invest 3,456 in Vital Farms on September 2, 2024 and sell it today you would lose (136.00) from holding Vital Farms or give up 3.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vital Farms vs. CHS Inc Pref
Performance |
| Timeline |
| Vital Farms |
| CHS Inc Pref |
Vital Farms and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vital Farms and CHS
The main advantage of trading using opposite Vital Farms and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital Farms position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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