Correlation Between Vital Farms and Dole PLC

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

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

Diversification Opportunities for Vital Farms and Dole PLC

0.31

Correlation Coefficient

Vital Farms  Dole PLC

Weak diversification

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

Pair Corralation between Vital Farms and Dole PLC

Given the investment horizon of 90 days Vital Farms is expected to generate 2.01 times more return on investment than Dole PLC. However, Vital Farms is 2.01 times more volatile than Dole PLC. It trades about 0.07 of its potential returns per unit of risk. Dole PLC is currently generating about 0.06 per unit of risk. If you would invest  1,499  in Vital Farms on September 3, 2024 and sell it today you would earn a total of  1,821  from holding Vital Farms or generate 121.48% 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.  Dole PLC

Vital Farms

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Farms are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Vital Farms disclosed solid returns over the last few months and may actually be approaching a breakup point.

Dole PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Dole PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vital Farms and Dole PLC

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

The idea behind Vital Farms and Dole PLC 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.