Correlation Between Westrock Coffee and Village Farms
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee and Village 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 Westrock Coffee and Village Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and Village Farms International, you can compare the effects of market volatilities on Westrock Coffee and Village 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 Westrock Coffee with a short position of Village Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and Village Farms.
Diversification Opportunities for Westrock Coffee and Village Farms
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westrock and Village is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Village Farms International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Farms Intern and Westrock Coffee 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 Westrock Coffee are associated (or correlated) with Village Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Farms Intern has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and Village Farms go up and down completely randomly.
Pair Corralation between Westrock Coffee and Village Farms
Given the investment horizon of 90 days Westrock Coffee is expected to generate 0.82 times more return on investment than Village Farms. However, Westrock Coffee is 1.22 times less risky than Village Farms. It trades about 0.14 of its potential returns per unit of risk. Village Farms International is currently generating about -0.17 per unit of risk. If you would invest 699.00 in Westrock Coffee on August 24, 2024 and sell it today you would earn a total of 68.00 from holding Westrock Coffee or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westrock Coffee vs. Village Farms International
Performance |
| Timeline |
| Westrock Coffee |
| Village Farms Intern |
Westrock Coffee and Village Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and Village Farms
The main advantage of trading using opposite Westrock Coffee and Village Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee position performs unexpectedly, Village 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 Village Farms will offset losses from the drop in Village Farms' long position.| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
| Village Farms vs. Alico Inc | Village Farms vs. SW Seed Company | Village Farms vs. Adecoagro SA | Village Farms vs. Tyson Foods |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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