Correlation Between Farmer Bros and Fresh Del

Can any of the company-specific risk be diversified away by investing in both Farmer Bros 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 Farmer Bros and Fresh Del 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 Fresh Del Monte, you can compare the effects of market volatilities on Farmer Bros 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 Farmer Bros with a short position of Fresh Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmer Bros and Fresh Del.

Diversification Opportunities for Farmer Bros and Fresh Del

0.22

Correlation Coefficient

Farmer Bros  Fresh Del

Modest diversification

The 3 months correlation between Farmer and Fresh is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Farmer Bros Co 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 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 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 Farmer Bros i.e., Farmer Bros and Fresh Del go up and down completely randomly.

Pair Corralation between Farmer Bros and Fresh Del

Given the investment horizon of 90 days Farmer Bros Co is expected to under-perform the Fresh Del. In addition to that, Farmer Bros is 2.28 times more volatile than Fresh Del Monte. It trades about 0.0 of its total potential returns per unit of risk. Fresh Del Monte is currently generating about 0.11 per unit of volatility. If you would invest  3,310  in Fresh Del Monte on May 4, 2025 and sell it today you would earn a total of  419.00  from holding Fresh Del Monte or generate 12.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Farmer Bros Co  vs.  Fresh Del Monte

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.

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 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Fresh Del reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farmer Bros and Fresh Del

The main advantage of trading using opposite Farmer Bros and Fresh Del positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmer Bros 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 Farmer Bros Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.