Correlation Between Vital Farms and Cimpress

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

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

Diversification Opportunities for Vital Farms and Cimpress

-0.49

Correlation Coefficient

Vital Farms  Cimpress

Very good diversification

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

Pair Corralation between Vital Farms and Cimpress

Given the investment horizon of 90 days Vital Farms is expected to generate 1.34 times more return on investment than Cimpress. However, Vital Farms is 1.34 times more volatile than Cimpress NV. It trades about 0.28 of its potential returns per unit of risk. Cimpress NV is currently generating about -0.04 per unit of risk. If you would invest  3,933  in Vital Farms on October 25, 2024 and sell it today you would earn a total of  506.00  from holding Vital Farms or generate 12.87% return on investment over 90 days.

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

Vital Farms  vs.  Cimpress NV

Vital Farms

Risk-Adjusted Performance

10 of 100

Good

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.

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cimpress is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vital Farms and Cimpress

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

The idea behind Vital Farms and Cimpress NV 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.