Correlation Between Vita Coco and Zevia Pbc

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

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

Diversification Opportunities for Vita Coco and Zevia Pbc

0.39

Correlation Coefficient

Vita Coco  Zevia Pbc

Weak diversification

The 3 months correlation between Vita and Zevia is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Zevia Pbc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zevia Pbc 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 Zevia Pbc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zevia Pbc has no effect on the direction of Vita Coco i.e., Vita Coco and Zevia Pbc go up and down completely randomly.

Pair Corralation between Vita Coco and Zevia Pbc

Given the investment horizon of 90 days Vita Coco is expected to generate 0.51 times more return on investment than Zevia Pbc. However, Vita Coco is 1.95 times less risky than Zevia Pbc. It trades about -0.09 of its potential returns per unit of risk. Zevia Pbc is currently generating about -0.13 per unit of risk. If you would invest  3,637  in Vita Coco on December 28, 2024 and sell it today you would lose (644.00) from holding Vita Coco or give up 17.71% of portfolio value over 90 days.

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

Vita Coco  vs.  Zevia Pbc

Vita Coco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vita Coco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Zevia Pbc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zevia Pbc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vita Coco and Zevia Pbc

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

The idea behind Vita Coco and Zevia Pbc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.