Correlation Between Vital Farms and Future Health

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

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

Diversification Opportunities for Vital Farms and Future Health

-0.48

Correlation Coefficient

Vital Farms  Future Health

Very good diversification

The 3 months correlation between Vital and Future is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Future Health ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Health ESG 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 Future Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Health ESG has no effect on the direction of Vital Farms i.e., Vital Farms and Future Health go up and down completely randomly.

Pair Corralation between Vital Farms and Future Health

Given the investment horizon of 90 days Vital Farms is expected to generate 0.18 times more return on investment than Future Health. However, Vital Farms is 5.65 times less risky than Future Health. It trades about 0.07 of its potential returns per unit of risk. Future Health ESG is currently generating about -0.08 per unit of risk. If you would invest  1,584  in Vital Farms on October 10, 2024 and sell it today you would earn a total of  2,176  from holding Vital Farms or generate 137.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.5%
Values	Daily Returns

Vital Farms  vs.  Future Health ESG

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.

Future Health ESG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Future Health ESG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Future Health is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Vital Farms and Future Health

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

The idea behind Vital Farms and Future Health ESG 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.