Correlation Between Vital Farms and Edible Garden
Can any of the company-specific risk be diversified away by investing in both Vital Farms and Edible Garden 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 Edible Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vital Farms and Edible Garden AG, you can compare the effects of market volatilities on Vital Farms and Edible Garden 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 Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Farms and Edible Garden.
Diversification Opportunities for Vital Farms and Edible Garden
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vital and Edible is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG 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 Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Vital Farms i.e., Vital Farms and Edible Garden go up and down completely randomly.
Pair Corralation between Vital Farms and Edible Garden
Given the investment horizon of 90 days Vital Farms is expected to under-perform the Edible Garden. But the stock apears to be less risky and, when comparing its historical volatility, Vital Farms is 5.28 times less risky than Edible Garden. The stock trades about -0.1 of its potential returns per unit of risk. The Edible Garden AG is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1.94 in Edible Garden AG on August 28, 2024 and sell it today you would lose (0.68) from holding Edible Garden AG or give up 35.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Vital Farms vs. Edible Garden AG
Performance |
| Timeline |
| Vital Farms |
| Edible Garden AG |
Vital Farms and Edible Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vital Farms and Edible Garden
The main advantage of trading using opposite Vital Farms and Edible Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital Farms position performs unexpectedly, Edible Garden 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 Edible Garden will offset losses from the drop in Edible Garden'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 |
| Edible Garden vs. Edible Garden AG | Edible Garden vs. Iveda Solutions Warrant | Edible Garden vs. Aclarion |
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 Directory module to find actively traded commodities issued by global exchanges.
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