Correlation Between Boot Barn and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Boot Barn 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 Boot Barn and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boot Barn Holdings and Lifeway Foods, you can compare the effects of market volatilities on Boot Barn 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 Boot Barn with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boot Barn and Lifeway Foods.
Diversification Opportunities for Boot Barn and Lifeway Foods
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boot and Lifeway is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and Boot Barn 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 Boot Barn Holdings 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 Boot Barn i.e., Boot Barn and Lifeway Foods go up and down completely randomly.
Pair Corralation between Boot Barn and Lifeway Foods
Given the investment horizon of 90 days Boot Barn Holdings is expected to generate 1.38 times more return on investment than Lifeway Foods. However, Boot Barn is 1.38 times more volatile than Lifeway Foods. It trades about 0.38 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.21 per unit of risk. If you would invest 15,182 in Boot Barn Holdings on November 1, 2024 and sell it today you would earn a total of 2,353 from holding Boot Barn Holdings or generate 15.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boot Barn Holdings vs. Lifeway Foods
Performance |
| Timeline |
| Boot Barn Holdings |
| Lifeway Foods |
Boot Barn and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boot Barn and Lifeway Foods
The main advantage of trading using opposite Boot Barn and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boot Barn 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.| Boot Barn vs. Ross Stores | Boot Barn vs. Childrens Place | Boot Barn vs. Buckle Inc | Boot Barn vs. Guess Inc |
| Lifeway Foods vs. Seneca Foods Corp | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Lifevantage |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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