Correlation Between BCE and Lifevantage
Can any of the company-specific risk be diversified away by investing in both BCE 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 BCE and Lifevantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Lifevantage, you can compare the effects of market volatilities on BCE 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 BCE with a short position of Lifevantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Lifevantage.
Diversification Opportunities for BCE and Lifevantage
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BCE and Lifevantage is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage and BCE 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 BCE Inc 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 BCE i.e., BCE and Lifevantage go up and down completely randomly.
Pair Corralation between BCE and Lifevantage
Considering the 90-day investment horizon BCE Inc is expected to under-perform the Lifevantage. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 3.09 times less risky than Lifevantage. The stock trades about -0.29 of its potential returns per unit of risk. The Lifevantage is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,400 in Lifevantage on September 12, 2024 and sell it today you would earn a total of 125.00 from holding Lifevantage or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. Lifevantage
Performance |
| Timeline |
| BCE Inc |
| Lifevantage |
BCE and Lifevantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Lifevantage
The main advantage of trading using opposite BCE and Lifevantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE 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.The idea behind BCE Inc and Lifevantage 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.| Lifevantage vs. Central Garden Pet | Lifevantage vs. Central Garden Pet | Lifevantage vs. Lifeway Foods | Lifevantage vs. Seneca Foods Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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