Correlation Between Farmer Bros and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Farmer Bros and ConAgra Foods 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 Farmer Bros and ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmer Bros Co and ConAgra Foods, you can compare the effects of market volatilities on Farmer Bros and ConAgra Foods 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 Farmer Bros with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmer Bros and ConAgra Foods.
Diversification Opportunities for Farmer Bros and ConAgra Foods
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farmer and ConAgra is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Farmer Bros Co and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Farmer Bros 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 Farmer Bros Co are associated (or correlated) with ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Farmer Bros i.e., Farmer Bros and ConAgra Foods go up and down completely randomly.
Pair Corralation between Farmer Bros and ConAgra Foods
Given the investment horizon of 90 days Farmer Bros Co is expected to generate 4.81 times more return on investment than ConAgra Foods. However, Farmer Bros is 4.81 times more volatile than ConAgra Foods. It trades about 0.03 of its potential returns per unit of risk. ConAgra Foods is currently generating about -0.05 per unit of risk. If you would invest 293.00 in Farmer Bros Co on January 20, 2024 and sell it today you would earn a total of 28.00 from holding Farmer Bros Co or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmer Bros Co vs. ConAgra Foods
Performance |
| Timeline |
| Farmer Bros |
| ConAgra Foods |
Farmer Bros and ConAgra Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmer Bros and ConAgra Foods
The main advantage of trading using opposite Farmer Bros and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmer Bros position performs unexpectedly, ConAgra Foods 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.| Farmer Bros vs. Green Globe International | Farmer Bros vs. Greenlane Holdings | Farmer Bros vs. 22nd Century Group | Farmer Bros vs. 1606 Corp |
| ConAgra Foods vs. Green Globe International | ConAgra Foods vs. Greenlane Holdings | ConAgra Foods vs. 22nd Century Group | ConAgra Foods vs. 1606 Corp |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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