Correlation Between Sprouts Farmers and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers and Vipshop Holdings 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 Sprouts Farmers and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Vipshop Holdings Limited, you can compare the effects of market volatilities on Sprouts Farmers and Vipshop Holdings 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 Sprouts Farmers with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Vipshop Holdings.
Diversification Opportunities for Sprouts Farmers and Vipshop Holdings
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprouts and Vipshop is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Sprouts Farmers 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 Sprouts Farmers Market are associated (or correlated) with Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Sprouts Farmers i.e., Sprouts Farmers and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Vipshop Holdings
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 0.53 times more return on investment than Vipshop Holdings. However, Sprouts Farmers Market is 1.87 times less risky than Vipshop Holdings. It trades about 0.17 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.29 per unit of risk. If you would invest 6,229 in Sprouts Farmers Market on January 20, 2024 and sell it today you would earn a total of 286.00 from holding Sprouts Farmers Market or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Sprouts Farmers Market |
| Vipshop Holdings |
Sprouts Farmers and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Vipshop Holdings
The main advantage of trading using opposite Sprouts Farmers and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Sprouts Farmers vs. Aquagold International | Sprouts Farmers vs. Morningstar Unconstrained Allocation | Sprouts Farmers vs. Thrivent High Yield | Sprouts Farmers vs. Via Renewables |
| Vipshop Holdings vs. Shoe Carnival | Vipshop Holdings vs. Hibbett Sports | Vipshop Holdings vs. Citi Trends | Vipshop Holdings vs. Zumiez Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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