Correlation Between Vital Farms and Peoples Insurance

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

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

Diversification Opportunities for Vital Farms and Peoples Insurance

0.3

Correlation Coefficient

Vital Farms  Peoples Insurance

Weak diversification

The 3 months correlation between Vital and Peoples is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and The Peoples Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance 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 Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance has no effect on the direction of Vital Farms i.e., Vital Farms and Peoples Insurance go up and down completely randomly.

Pair Corralation between Vital Farms and Peoples Insurance

Given the investment horizon of 90 days Vital Farms is expected to generate 1.46 times less return on investment than Peoples Insurance. But when comparing it to its historical volatility, Vital Farms is 2.04 times less risky than Peoples Insurance. It trades about 0.14 of its potential returns per unit of risk. The Peoples Insurance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  11.00  in The Peoples Insurance on October 7, 2024 and sell it today you would earn a total of  25.00  from holding The Peoples Insurance or generate 227.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

Vital Farms  vs.  The Peoples Insurance

Vital Farms

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Farms are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Vital Farms may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Peoples Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Peoples Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Peoples Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vital Farms and Peoples Insurance

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

The idea behind Vital Farms and The Peoples Insurance 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.