Correlation Between Freshpet and Farmmi
Can any of the company-specific risk be diversified away by investing in both Freshpet and Farmmi 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 Freshpet and Farmmi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and Farmmi Inc, you can compare the effects of market volatilities on Freshpet and Farmmi 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 Freshpet with a short position of Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and Farmmi.
Diversification Opportunities for Freshpet and Farmmi
Pay attention - limited upside
The 3 months correlation between Freshpet and Farmmi is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and Freshpet 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 Freshpet are associated (or correlated) with Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of Freshpet i.e., Freshpet and Farmmi go up and down completely randomly.
Pair Corralation between Freshpet and Farmmi
Given the investment horizon of 90 days Freshpet is expected to generate 0.41 times more return on investment than Farmmi. However, Freshpet is 2.42 times less risky than Farmmi. It trades about 0.18 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.35 per unit of risk. If you would invest 10,953 in Freshpet on December 30, 2023 and sell it today you would earn a total of 633.00 from holding Freshpet or generate 5.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Freshpet vs. Farmmi Inc
Performance |
Timeline |
Freshpet |
Farmmi Inc |
Freshpet and Farmmi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freshpet and Farmmi
The main advantage of trading using opposite Freshpet and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet position performs unexpectedly, Farmmi 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 Farmmi will offset losses from the drop in Farmmi's long position.Freshpet vs. Natural Alternatives International | Freshpet vs. Natures Sunshine Products | Freshpet vs. Nocera Inc | Freshpet vs. Borealis Foods |
Farmmi vs. Natural Alternatives International | Farmmi vs. Natures Sunshine Products | Farmmi vs. Nocera Inc | Farmmi vs. Borealis Foods |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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