Correlation Between Sprouts Farmers and Vipshop Holdings

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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, 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

  Correlation Coefficient

Very good diversification

The 3 months correlation between Sprouts and Vipshop is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Vipshop Holdings Ltd 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 0.56 times more return on investment than Vipshop Holdings. However, Sprouts Farmers Market is 1.77 times less risky than Vipshop Holdings. It trades about 0.02 of its potential returns per unit of risk. Vipshop Holdings is currently generating about -0.02 per unit of risk. If you would invest  2,452  in Sprouts Farmers Market on March 31, 2022 and sell it today you would earn a total of  94.00  from holding Sprouts Farmers Market or generate 3.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Sprouts Farmers Market  vs.  Vipshop Holdings Ltd

 Performance (%) 
Sprouts Farmers Market 
Sprouts Performance
0 of 100
Over the last 90 days Sprouts Farmers Market has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively steady which may send shares a bit higher in July 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Sprouts Price Channel

Vipshop Holdings 
Vipshop Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vipshop Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Vipshop Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Last Split Factor
Last Split Date

Vipshop Price Channel

Sprouts Farmers and Vipshop Holdings Volatility Contrast

 Predicted Return Density 

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.
The idea behind Sprouts Farmers Market and Vipshop Holdings 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.
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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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