Correlation Between Vital Farms and Nates Food

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

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

Diversification Opportunities for Vital Farms and Nates Food

-0.31

Correlation Coefficient

Vital Farms  Nates Food

Very good diversification

The 3 months correlation between Vital and Nates is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Nates Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nates Food 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 Nates Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nates Food has no effect on the direction of Vital Farms i.e., Vital Farms and Nates Food go up and down completely randomly.

Pair Corralation between Vital Farms and Nates Food

Given the investment horizon of 90 days Vital Farms is expected to under-perform the Nates Food. But the stock apears to be less risky and, when comparing its historical volatility, Vital Farms is 63.74 times less risky than Nates Food. The stock trades about -0.1 of its potential returns per unit of risk. The Nates Food Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Nates Food Co on December 19, 2024 and sell it today you would earn a total of  0.01  from holding Nates Food Co or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.14%
Values	Daily Returns

Vital Farms  vs.  Nates Food Co

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.

Nates Food

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nates Food Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Nates Food exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vital Farms and Nates Food

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

The idea behind Vital Farms and Nates Food Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.