Correlation Between Central Garden and Lifevantage
Can any of the company-specific risk be diversified away by investing in both Central Garden 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 Central Garden and Lifevantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and Lifevantage, you can compare the effects of market volatilities on Central Garden 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 Central Garden with a short position of Lifevantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Lifevantage.
Diversification Opportunities for Central Garden and Lifevantage
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Lifevantage is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage and Central Garden 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 Central Garden Pet 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 Central Garden i.e., Central Garden and Lifevantage go up and down completely randomly.
Pair Corralation between Central Garden and Lifevantage
Assuming the 90 days horizon Central Garden Pet is expected to generate 0.41 times more return on investment than Lifevantage. However, Central Garden Pet is 2.46 times less risky than Lifevantage. It trades about 0.18 of its potential returns per unit of risk. Lifevantage is currently generating about -0.23 per unit of risk. If you would invest 3,069 in Central Garden Pet on November 18, 2024 and sell it today you would earn a total of 256.00 from holding Central Garden Pet or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. Lifevantage
Performance |
| Timeline |
| Central Garden Pet |
| Lifevantage |
Central Garden and Lifevantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Lifevantage
The main advantage of trading using opposite Central Garden and Lifevantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden 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.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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