Correlation Between Big Tree and Lifevantage
Can any of the company-specific risk be diversified away by investing in both Big Tree 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 Big Tree and Lifevantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Tree Cloud and Lifevantage, you can compare the effects of market volatilities on Big Tree 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 Big Tree with a short position of Lifevantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Tree and Lifevantage.
Diversification Opportunities for Big Tree and Lifevantage
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Big and Lifevantage is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Big Tree Cloud and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage and Big Tree 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 Big Tree Cloud 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 Big Tree i.e., Big Tree and Lifevantage go up and down completely randomly.
Pair Corralation between Big Tree and Lifevantage
Considering the 90-day investment horizon Big Tree Cloud is expected to under-perform the Lifevantage. In addition to that, Big Tree is 3.04 times more volatile than Lifevantage. It trades about -0.05 of its total potential returns per unit of risk. Lifevantage is currently generating about 0.18 per unit of volatility. If you would invest 1,300 in Lifevantage on September 2, 2024 and sell it today you would earn a total of 161.00 from holding Lifevantage or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Tree Cloud vs. Lifevantage
Performance |
| Timeline |
| Big Tree Cloud |
| Lifevantage |
Big Tree and Lifevantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Tree and Lifevantage
The main advantage of trading using opposite Big Tree and Lifevantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Tree 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.| Big Tree vs. Vera Bradley | Big Tree vs. Lincoln Electric Holdings | Big Tree vs. Unilever PLC ADR | Big Tree vs. Inter Parfums |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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