Correlation Between Granite Construction and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Granite Construction 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 Granite Construction and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Lifeway Foods, you can compare the effects of market volatilities on Granite Construction 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 Granite Construction with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Lifeway Foods.
Diversification Opportunities for Granite Construction and Lifeway Foods
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Granite and Lifeway is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and Granite Construction 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 Granite Construction 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 Granite Construction i.e., Granite Construction and Lifeway Foods go up and down completely randomly.
Pair Corralation between Granite Construction and Lifeway Foods
Assuming the 90 days trading horizon Granite Construction is expected to generate 1.4 times less return on investment than Lifeway Foods. But when comparing it to its historical volatility, Granite Construction is 2.92 times less risky than Lifeway Foods. It trades about 0.16 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,090 in Lifeway Foods on September 14, 2024 and sell it today you would earn a total of 1,170 from holding Lifeway Foods or generate 107.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. Lifeway Foods
Performance |
| Timeline |
| Granite Construction |
| Lifeway Foods |
Granite Construction and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Lifeway Foods
The main advantage of trading using opposite Granite Construction and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
| Lifeway Foods vs. Hormel Foods | Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. SIVERS SEMICONDUCTORS AB | Lifeway Foods vs. NorAm Drilling AS |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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