Correlation Between Village Farms and Limoneira

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

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

Diversification Opportunities for Village Farms and Limoneira

0.74

Correlation Coefficient

Village Farms  Limoneira

Poor diversification

The 3 months correlation between Village and Limoneira is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Village Farms International and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira and Village Farms 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 Village Farms International are associated (or correlated) with Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Village Farms i.e., Village Farms and Limoneira go up and down completely randomly.

Pair Corralation between Village Farms and Limoneira

Considering the 90-day investment horizon Village Farms International is expected to generate 1.5 times more return on investment than Limoneira. However, Village Farms is 1.5 times more volatile than Limoneira Co. It trades about -0.09 of its potential returns per unit of risk. Limoneira Co is currently generating about -0.21 per unit of risk. If you would invest  79.00  in Village Farms International on December 27, 2024 and sell it today you would lose (16.00) from holding Village Farms International or give up 20.25% of portfolio value over 90 days.

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

Village Farms International  vs.  Limoneira Co

Village Farms Intern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Village Farms International 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Limoneira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Village Farms and Limoneira

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

The idea behind Village Farms International and Limoneira Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.