Correlation Between FitLife Brands, and Vital Farms

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

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

Diversification Opportunities for FitLife Brands, and Vital Farms

-0.14

Correlation Coefficient

FitLife Brands,  Vital Farms

Good diversification

The 3 months correlation between FitLife and Vital is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding FitLife Brands, Common and Vital Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Farms and FitLife Brands, 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 FitLife Brands, Common 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 FitLife Brands, i.e., FitLife Brands, and Vital Farms go up and down completely randomly.

Pair Corralation between FitLife Brands, and Vital Farms

Given the investment horizon of 90 days FitLife Brands, is expected to generate 2.29 times less return on investment than Vital Farms. But when comparing it to its historical volatility, FitLife Brands, Common is 1.18 times less risky than Vital Farms. It trades about 0.07 of its potential returns per unit of risk. Vital Farms is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,544  in Vital Farms on October 7, 2024 and sell it today you would earn a total of  2,419  from holding Vital Farms or generate 156.67% return on investment over 90 days.

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

FitLife Brands, Common  vs.  Vital Farms

FitLife Brands, Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FitLife Brands, Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, FitLife Brands, is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vital Farms

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Farms are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Vital Farms may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FitLife Brands, and Vital Farms

The main advantage of trading using opposite FitLife Brands, and Vital Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FitLife Brands, 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 FitLife Brands, Common 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.