Correlation Between Vital Farms and BHCCN

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

By analyzing existing cross correlation between Vital Farms and BHCCN 11 30 SEP 28, you can compare the effects of market volatilities on Vital Farms and BHCCN 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 BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Farms and BHCCN.

Diversification Opportunities for Vital Farms and BHCCN

-0.06

Correlation Coefficient

Vital Farms  BHCCN

Good diversification

The 3 months correlation between Vital and BHCCN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and BHCCN 11 30 SEP 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 11 30 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 BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 11 30 has no effect on the direction of Vital Farms i.e., Vital Farms and BHCCN go up and down completely randomly.

Pair Corralation between Vital Farms and BHCCN

Given the investment horizon of 90 days Vital Farms is expected to under-perform the BHCCN. In addition to that, Vital Farms is 2.01 times more volatile than BHCCN 11 30 SEP 28. It trades about -0.1 of its total potential returns per unit of risk. BHCCN 11 30 SEP 28 is currently generating about 0.03 per unit of volatility. If you would invest  9,600  in BHCCN 11 30 SEP 28 on December 22, 2024 and sell it today you would earn a total of  219.00  from holding BHCCN 11 30 SEP 28 or generate 2.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Vital Farms  vs.  BHCCN 11 30 SEP 28

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.

BHCCN 11 30

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BHCCN 11 30 SEP 28 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BHCCN 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 BHCCN

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

The idea behind Vital Farms and BHCCN 11 30 SEP 28 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.