Correlation Between Vital Farms and Marchex

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

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

Diversification Opportunities for Vital Farms and Marchex

-0.02

Correlation Coefficient

Vital Farms  Marchex

Good diversification

The 3 months correlation between Vital and Marchex is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex 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 Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Vital Farms i.e., Vital Farms and Marchex go up and down completely randomly.

Pair Corralation between Vital Farms and Marchex

Given the investment horizon of 90 days Vital Farms is expected to under-perform the Marchex. In addition to that, Vital Farms is 1.44 times more volatile than Marchex. It trades about -0.12 of its total potential returns per unit of risk. Marchex is currently generating about -0.01 per unit of volatility. If you would invest  199.00  in Marchex on December 20, 2024 and sell it today you would lose (6.00) from holding Marchex or give up 3.02% of portfolio value over 90 days.

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

Vital Farms  vs.  Marchex

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.

Marchex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vital Farms and Marchex

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

The idea behind Vital Farms and Marchex 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.