Correlation Between AMCON Distributing and Vital Farms

Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and Vital 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 AMCON Distributing and Vital Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMCON Distributing and Vital Farms, you can compare the effects of market volatilities on AMCON Distributing and Vital 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 AMCON Distributing with a short position of Vital Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Vital Farms.

Diversification Opportunities for AMCON Distributing and Vital Farms

0.15

Correlation Coefficient

AMCON Distributing  Vital Farms

Average diversification

The 3 months correlation between AMCON and Vital is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Vital Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Farms and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with Vital Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Farms has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Vital Farms go up and down completely randomly.

Pair Corralation between AMCON Distributing and Vital Farms

Considering the 90-day investment horizon AMCON Distributing is expected to under-perform the Vital Farms. But the stock apears to be less risky and, when comparing its historical volatility, AMCON Distributing is 1.0 times less risky than Vital Farms. The stock trades about 0.0 of its potential returns per unit of risk. The Vital Farms is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,706  in Vital Farms on October 26, 2024 and sell it today you would earn a total of  2,806  from holding Vital Farms or generate 164.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.99%
Values	Daily Returns

AMCON Distributing  vs.  Vital Farms

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Vital Farms

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Farms are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Vital Farms disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMCON Distributing and Vital Farms

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

The idea behind AMCON Distributing and Vital Farms 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 Transaction History module to view history of all your transactions and understand their impact on performance.