Correlation Between Vital Farms and Campbell Soup
Can any of the company-specific risk be diversified away by investing in both Vital Farms and Campbell Soup 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 Campbell Soup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vital Farms and Campbell Soup, you can compare the effects of market volatilities on Vital Farms and Campbell Soup 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 Campbell Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Farms and Campbell Soup.
Diversification Opportunities for Vital Farms and Campbell Soup
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vital and Campbell is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup 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 Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of Vital Farms i.e., Vital Farms and Campbell Soup go up and down completely randomly.
Pair Corralation between Vital Farms and Campbell Soup
Given the investment horizon of 90 days Vital Farms is expected to generate 3.18 times more return on investment than Campbell Soup. However, Vital Farms is 3.18 times more volatile than Campbell Soup. It trades about 0.01 of its potential returns per unit of risk. Campbell Soup is currently generating about -0.06 per unit of risk. If you would invest 3,456 in Vital Farms on September 4, 2024 and sell it today you would lose (42.00) from holding Vital Farms or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vital Farms vs. Campbell Soup
Performance |
| Timeline |
| Vital Farms |
| Campbell Soup |
Vital Farms and Campbell Soup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vital Farms and Campbell Soup
The main advantage of trading using opposite Vital Farms and Campbell Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital Farms position performs unexpectedly, Campbell Soup 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 Campbell Soup will offset losses from the drop in Campbell Soup's long position.| Vital Farms vs. Campbell Soup | Vital Farms vs. ConAgra Foods | Vital Farms vs. Hormel Foods | Vital Farms vs. Kellanova |
| Campbell Soup vs. General Mills | Campbell Soup vs. Hormel Foods | Campbell Soup vs. Kellanova | Campbell Soup vs. Lamb Weston Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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