Correlation Between Shimmick Common and Vital Farms

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

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

Diversification Opportunities for Shimmick Common and Vital Farms

0.4

Correlation Coefficient

Shimmick Common  Vital Farms

Very weak diversification

The 3 months correlation between Shimmick and Vital is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shimmick Common and Vital Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Farms and Shimmick Common 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 Shimmick 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 Shimmick Common i.e., Shimmick Common and Vital Farms go up and down completely randomly.

Pair Corralation between Shimmick Common and Vital Farms

Given the investment horizon of 90 days Shimmick Common is expected to generate 7.81 times less return on investment than Vital Farms. In addition to that, Shimmick Common is 2.54 times more volatile than Vital Farms. It trades about 0.0 of its total potential returns per unit of risk. Vital Farms is currently generating about 0.07 per unit of volatility. If you would invest  1,765  in Vital Farms on October 23, 2024 and sell it today you would earn a total of  2,736  from holding Vital Farms or generate 155.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	59.92%
Values	Daily Returns

Shimmick Common  vs.  Vital Farms

Shimmick Common

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shimmick Common are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Shimmick Common displayed solid returns over the last few months and may actually be approaching a breakup point.

Vital Farms

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Farms are ranked lower than 10 (%) 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 Shimmick Common and Vital Farms

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