Correlation Between Vital Farms and Stagwell

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

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

Diversification Opportunities for Vital Farms and Stagwell

0.36

Correlation Coefficient

Vital Farms  Stagwell

Weak diversification

The 3 months correlation between Vital and Stagwell is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Vital Farms i.e., Vital Farms and Stagwell go up and down completely randomly.

Pair Corralation between Vital Farms and Stagwell

Given the investment horizon of 90 days Vital Farms is expected to under-perform the Stagwell. In addition to that, Vital Farms is 1.5 times more volatile than Stagwell. It trades about -0.12 of its total potential returns per unit of risk. Stagwell is currently generating about -0.06 per unit of volatility. If you would invest  682.00  in Stagwell on December 20, 2024 and sell it today you would lose (70.00) from holding Stagwell or give up 10.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vital Farms  vs.  Stagwell

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.

Stagwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Vital Farms and Stagwell

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

The idea behind Vital Farms and Stagwell 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.