Correlation Between SHIP HEALTHCARE and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE and Lifeway Foods 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 SHIP HEALTHCARE and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and Lifeway Foods, you can compare the effects of market volatilities on SHIP HEALTHCARE and Lifeway Foods 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 SHIP HEALTHCARE with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and Lifeway Foods.
Diversification Opportunities for SHIP HEALTHCARE and Lifeway Foods
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SHIP and Lifeway is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Lifeway Foods go up and down completely randomly.
Pair Corralation between SHIP HEALTHCARE and Lifeway Foods
Assuming the 90 days horizon SHIP HEALTHCARE is expected to generate 22.72 times less return on investment than Lifeway Foods. But when comparing it to its historical volatility, SHIP HEALTHCARE HLDGINC is 2.62 times less risky than Lifeway Foods. It trades about 0.01 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Lifeway Foods on September 3, 2024 and sell it today you would earn a total of 140.00 from holding Lifeway Foods or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIP HEALTHCARE HLDGINC vs. Lifeway Foods
Performance |
| Timeline |
| SHIP HEALTHCARE HLDGINC |
| Lifeway Foods |
SHIP HEALTHCARE and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIP HEALTHCARE and Lifeway Foods
The main advantage of trading using opposite SHIP HEALTHCARE and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| SHIP HEALTHCARE vs. DEVRY EDUCATION GRP | SHIP HEALTHCARE vs. Titan Machinery | SHIP HEALTHCARE vs. CHINA EDUCATION GROUP | SHIP HEALTHCARE vs. United Utilities Group |
| Lifeway Foods vs. Nestl SA | Lifeway Foods vs. Kraft Heinz Co | Lifeway Foods vs. General Mills | Lifeway Foods vs. Kellogg Company |
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 CEOs Directory module to screen CEOs from public companies around the world.
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