Correlation Between Hf Foods and Vital Farms

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

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

Diversification Opportunities for Hf Foods and Vital Farms

-0.11

Correlation Coefficient

Hf Foods  Vital Farms

Good diversification

The 3 months correlation between HFFG and Vital is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group and Vital Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Farms and Hf Foods 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 Hf Foods Group 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 Hf Foods i.e., Hf Foods and Vital Farms go up and down completely randomly.

Pair Corralation between Hf Foods and Vital Farms

Given the investment horizon of 90 days Hf Foods Group is expected to under-perform the Vital Farms. But the stock apears to be less risky and, when comparing its historical volatility, Hf Foods Group is 1.03 times less risky than Vital Farms. The stock trades about -0.43 of its potential returns per unit of risk. The Vital Farms is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,697  in Vital Farms on October 10, 2024 and sell it today you would earn a total of  63.00  from holding Vital Farms or generate 1.7% return on investment over 90 days.

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

Hf Foods Group  vs.  Vital Farms

Hf Foods Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hf Foods Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Vital Farms

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vital Farms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Vital Farms is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hf Foods and Vital Farms

The main advantage of trading using opposite Hf Foods and Vital Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hf Foods 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 Hf Foods Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.