Correlation Between Vita Coco and Stifel Financial

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

By analyzing existing cross correlation between Vita Coco and Stifel Financial Corp, you can compare the effects of market volatilities on Vita Coco and Stifel Financial 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 Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Stifel Financial.

Diversification Opportunities for Vita Coco and Stifel Financial

-0.02

Correlation Coefficient

Vita Coco  Stifel Financial

Good diversification

The 3 months correlation between Vita and Stifel is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of Vita Coco i.e., Vita Coco and Stifel Financial go up and down completely randomly.

Pair Corralation between Vita Coco and Stifel Financial

Given the investment horizon of 90 days Vita Coco is expected to generate 1.03 times less return on investment than Stifel Financial. In addition to that, Vita Coco is 2.25 times more volatile than Stifel Financial Corp. It trades about 0.04 of its total potential returns per unit of risk. Stifel Financial Corp is currently generating about 0.09 per unit of volatility. If you would invest  2,437  in Stifel Financial Corp on October 26, 2024 and sell it today you would earn a total of  65.00  from holding Stifel Financial Corp or generate 2.67% return on investment over 90 days.

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

Vita Coco  vs.  Stifel Financial Corp

Vita Coco

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 13 (%) 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.

Stifel Financial Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Stifel Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vita Coco and Stifel Financial

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

The idea behind Vita Coco and Stifel Financial Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.