Correlation Between Vital Farms and Bunge

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

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

Diversification Opportunities for Vital Farms and Bunge

0.49

Correlation Coefficient

Vital Farms  Bunge

Very weak diversification

The 3 months correlation between Vital and Bunge is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited and Vital 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 Vital Farms are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of Vital Farms i.e., Vital Farms and Bunge go up and down completely randomly.

Pair Corralation between Vital Farms and Bunge

Given the investment horizon of 90 days Vital Farms is expected to under-perform the Bunge. In addition to that, Vital Farms is 2.16 times more volatile than Bunge Limited. It trades about -0.06 of its total potential returns per unit of risk. Bunge Limited is currently generating about -0.04 per unit of volatility. If you would invest  7,837  in Bunge Limited on December 18, 2024 and sell it today you would lose (382.00) from holding Bunge Limited or give up 4.87% of portfolio value over 90 days.

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

Vital Farms  vs.  Bunge Limited

Vital Farms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vital Farms 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bunge Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vital Farms and Bunge

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

The idea behind Vital Farms and Bunge Limited 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.