Correlation Between Vital Farms and Fresh Del

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

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

Diversification Opportunities for Vital Farms and Fresh Del

0.38

Correlation Coefficient

Vital Farms  Fresh Del

Weak diversification

The 3 months correlation between Vital and Fresh is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte 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 Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of Vital Farms i.e., Vital Farms and Fresh Del go up and down completely randomly.

Pair Corralation between Vital Farms and Fresh Del

Given the investment horizon of 90 days Vital Farms is expected to generate 1.98 times more return on investment than Fresh Del. However, Vital Farms is 1.98 times more volatile than Fresh Del Monte. It trades about 0.07 of its potential returns per unit of risk. Fresh Del Monte is currently generating about 0.04 per unit of risk. If you would invest  1,519  in Vital Farms on February 11, 2025 and sell it today you would earn a total of  1,937  from holding Vital Farms or generate 127.52% return on investment over 90 days.

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

Vital Farms  vs.  Fresh Del Monte

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 quite persistent basic indicators, Vital Farms is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Fresh Del Monte

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Fresh Del may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Vital Farms and Fresh Del

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

The idea behind Vital Farms and Fresh Del Monte 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.