Correlation Between Astar and Lifetime Brands
Can any of the company-specific risk be diversified away by investing in both Astar and Lifetime Brands 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 Astar and Lifetime Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Lifetime Brands, you can compare the effects of market volatilities on Astar and Lifetime Brands 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 Astar with a short position of Lifetime Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Lifetime Brands.
Diversification Opportunities for Astar and Lifetime Brands
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Astar and Lifetime is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Lifetime Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifetime Brands and Astar 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 Astar are associated (or correlated) with Lifetime Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifetime Brands has no effect on the direction of Astar i.e., Astar and Lifetime Brands go up and down completely randomly.
Pair Corralation between Astar and Lifetime Brands
Assuming the 90 days trading horizon Astar is expected to under-perform the Lifetime Brands. In addition to that, Astar is 1.35 times more volatile than Lifetime Brands. It trades about -0.25 of its total potential returns per unit of risk. Lifetime Brands is currently generating about 0.31 per unit of volatility. If you would invest 565.00 in Lifetime Brands on November 2, 2024 and sell it today you would earn a total of 117.00 from holding Lifetime Brands or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Astar vs. Lifetime Brands
Performance |
| Timeline |
| Astar |
| Lifetime Brands |
Astar and Lifetime Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Lifetime Brands
The main advantage of trading using opposite Astar and Lifetime Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Lifetime Brands 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 Lifetime Brands will offset losses from the drop in Lifetime Brands' long position.The idea behind Astar and Lifetime Brands 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.| Lifetime Brands vs. Bassett Furniture Industries | Lifetime Brands vs. Flexsteel Industries | Lifetime Brands vs. Hamilton Beach Brands | Lifetime Brands vs. Natuzzi SpA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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