Correlation Between Vital Farms and Global Clean

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

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

Diversification Opportunities for Vital Farms and Global Clean

0.58

Correlation Coefficient

Vital Farms  Global Clean

Very weak diversification

The 3 months correlation between Vital and Global is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Global Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Clean Energy 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 Global Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Clean Energy has no effect on the direction of Vital Farms i.e., Vital Farms and Global Clean go up and down completely randomly.

Pair Corralation between Vital Farms and Global Clean

Given the investment horizon of 90 days Vital Farms is expected to generate 0.43 times more return on investment than Global Clean. However, Vital Farms is 2.33 times less risky than Global Clean. It trades about -0.07 of its potential returns per unit of risk. Global Clean Energy is currently generating about -0.16 per unit of risk. If you would invest  3,716  in Vital Farms on December 28, 2024 and sell it today you would lose (689.00) from holding Vital Farms or give up 18.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Vital Farms  vs.  Global Clean Energy

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.

Global Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Vital Farms and Global Clean

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

The idea behind Vital Farms and Global Clean Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.