Correlation Between Vita Coco and Barfresh Food

Can any of the company-specific risk be diversified away by investing in both Vita Coco and Barfresh Food 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 Vita Coco and Barfresh Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vita Coco and Barfresh Food Group, you can compare the effects of market volatilities on Vita Coco and Barfresh Food 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 Vita Coco with a short position of Barfresh Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Barfresh Food.

Diversification Opportunities for Vita Coco and Barfresh Food

0.46

Correlation Coefficient

Vita Coco  Barfresh Food

Very weak diversification

The 3 months correlation between Vita and Barfresh is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Barfresh Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barfresh Food Group and Vita Coco 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 Vita Coco are associated (or correlated) with Barfresh Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barfresh Food Group has no effect on the direction of Vita Coco i.e., Vita Coco and Barfresh Food go up and down completely randomly.

Pair Corralation between Vita Coco and Barfresh Food

Given the investment horizon of 90 days Vita Coco is expected to generate 1.72 times less return on investment than Barfresh Food. But when comparing it to its historical volatility, Vita Coco is 2.88 times less risky than Barfresh Food. It trades about 0.12 of its potential returns per unit of risk. Barfresh Food Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  238.00  in Barfresh Food Group on October 20, 2024 and sell it today you would earn a total of  41.00  from holding Barfresh Food Group or generate 17.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Vita Coco  vs.  Barfresh Food Group

Vita Coco

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Barfresh Food Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barfresh Food Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Barfresh Food demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vita Coco and Barfresh Food

The main advantage of trading using opposite Vita Coco and Barfresh Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco position performs unexpectedly, Barfresh Food 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 Barfresh Food will offset losses from the drop in Barfresh Food's long position.

The idea behind Vita Coco and Barfresh Food Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.