Correlation Between Acme United and Lifevantage
Can any of the company-specific risk be diversified away by investing in both Acme United and Lifevantage 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 Acme United and Lifevantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Lifevantage, you can compare the effects of market volatilities on Acme United and Lifevantage 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 Acme United with a short position of Lifevantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Lifevantage.
Diversification Opportunities for Acme United and Lifevantage
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Acme and Lifevantage is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage and Acme United 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 Acme United are associated (or correlated) with Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Acme United i.e., Acme United and Lifevantage go up and down completely randomly.
Pair Corralation between Acme United and Lifevantage
Considering the 90-day investment horizon Acme United is expected to generate 22.29 times less return on investment than Lifevantage. But when comparing it to its historical volatility, Acme United is 3.56 times less risky than Lifevantage. It trades about 0.06 of its potential returns per unit of risk. Lifevantage is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,635 in Lifevantage on October 23, 2024 and sell it today you would earn a total of 864.50 from holding Lifevantage or generate 52.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acme United vs. Lifevantage
Performance |
| Timeline |
| Acme United |
| Lifevantage |
Acme United and Lifevantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acme United and Lifevantage
The main advantage of trading using opposite Acme United and Lifevantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Lifevantage 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 Lifevantage will offset losses from the drop in Lifevantage's long position.| Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
| Lifevantage vs. Seneca Foods Corp | Lifevantage vs. Central Garden Pet | Lifevantage vs. Central Garden Pet | Lifevantage vs. Lifeway 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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