4.48 -0.21 (-4.68%) Sell

Don't buy DF now, it is a volatile investment

13 min read

DEAN FOODS CO significantly underperformed on Friday. It returned -4.68% to close at 4.48. It is currently trading -62% below it's 52 week high of 11.91.

[Themes containing DF]

DF showed a strong down trend over the last 3 months. During this period DF returned -41.36% and saw a maximum drawdown of -45.54%. There were 2 short signals during this period that returned a cumulative of +24.94% to investors.


DF has been underperforming the SP500 index in recent time, after having outperformed till 16 Feb, 2016. Over the last 2 years 11 months and 10 days, DF underperformed the SP500 index on 50% days. Which indicates that on days DF underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

DF returned losses on 54% days in the last three months. During this time, it delivered on average -0.77% per day. It delivered it's worst daily return of -22.08%, during this period, on Wednesday, 7 Nov, 2018. There was initially a bullish trend during this period which started on 28 Sep, 2018 and went on till 3 Oct, 2018. The bullish trend returned +2.25% to investors. This was followed by a bearish trend that started on 30 Nov, 2018 and ended on 10 Dec, 2018. This bearish trend lost -14.7% of investor capital.

On monthly basis, DF delivered losses in more months over the last year, than profits. DF delivered profits less regularly than SP500 index. DF was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -36.92% compared to -7.28% returned by SP500 index in Oct 2018. DF had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both DF and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community.

DF is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in DF's volatility from 21 Sep, 2018 to 7 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that DF has significant positive skewness in it's return distribution. This indicates that investors can expect DF to recover from drawdowns quickly. Which makes DF a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than DF. Therefore, SP500 must receive a lower allocation than DF in your portfolio. DF usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in DF), two instruments that have delivered similar performance as DF are REFR and CC. They are suitable as good alternative investment candidates that can diversify your portfolio.

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