Correlation Between National Retail and LIFEWAY FOODS
Can any of the company-specific risk be diversified away by investing in both National Retail 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 National Retail and LIFEWAY FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and LIFEWAY FOODS, you can compare the effects of market volatilities on National Retail 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 National Retail with a short position of LIFEWAY FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and LIFEWAY FOODS.
Diversification Opportunities for National Retail and LIFEWAY FOODS
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and LIFEWAY is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and LIFEWAY FOODS go up and down completely randomly.
Pair Corralation between National Retail and LIFEWAY FOODS
Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.63 times more return on investment than LIFEWAY FOODS. However, National Retail Properties is 1.58 times less risky than LIFEWAY FOODS. It trades about -0.03 of its potential returns per unit of risk. LIFEWAY FOODS is currently generating about -0.07 per unit of risk. If you would invest 4,245 in National Retail Properties on August 27, 2024 and sell it today you would lose (76.00) from holding National Retail Properties or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. LIFEWAY FOODS
Performance |
| Timeline |
| National Retail Prop |
| LIFEWAY FOODS |
National Retail and LIFEWAY FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and LIFEWAY FOODS
The main advantage of trading using opposite National Retail and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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's long position.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
| LIFEWAY FOODS vs. Microchip Technology Incorporated | LIFEWAY FOODS vs. DXC Technology Co | LIFEWAY FOODS vs. CapitaLand Investment Limited | LIFEWAY FOODS vs. MGIC INVESTMENT |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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