Correlation Between BranchOut Food and Farmer Bros

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

By analyzing existing cross correlation between BranchOut Food Common and Farmer Bros Co, you can compare the effects of market volatilities on BranchOut Food and Farmer Bros 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 BranchOut Food with a short position of Farmer Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of BranchOut Food and Farmer Bros.

Diversification Opportunities for BranchOut Food and Farmer Bros

-0.28

Correlation Coefficient

BranchOut Food  Farmer Bros

Very good diversification

The 3 months correlation between BranchOut and Farmer is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding BranchOut Food Common and Farmer Bros Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmer Bros and BranchOut Food 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 BranchOut Food Common are associated (or correlated) with Farmer Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmer Bros has no effect on the direction of BranchOut Food i.e., BranchOut Food and Farmer Bros go up and down completely randomly.

Pair Corralation between BranchOut Food and Farmer Bros

Considering the 90-day investment horizon BranchOut Food Common is expected to generate 1.21 times more return on investment than Farmer Bros. However, BranchOut Food is 1.21 times more volatile than Farmer Bros Co. It trades about 0.07 of its potential returns per unit of risk. Farmer Bros Co is currently generating about -0.01 per unit of risk. If you would invest  203.00  in BranchOut Food Common on May 2, 2025 and sell it today you would earn a total of  31.00  from holding BranchOut Food Common or generate 15.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BranchOut Food Common  vs.  Farmer Bros Co

BranchOut Food Common

Risk-Adjusted Performance

Modest

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

Farmer Bros

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farmer Bros Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Farmer Bros is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BranchOut Food and Farmer Bros

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

The idea behind BranchOut Food Common and Farmer Bros Co 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.