Correlation Between HEALTHCARE REAL and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both HEALTHCARE REAL 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 HEALTHCARE REAL and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEALTHCARE REAL A and Lifeway Foods, you can compare the effects of market volatilities on HEALTHCARE REAL 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 HEALTHCARE REAL with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE REAL and Lifeway Foods.
Diversification Opportunities for HEALTHCARE REAL and Lifeway Foods
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HEALTHCARE and Lifeway is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE REAL A and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and HEALTHCARE REAL 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 HEALTHCARE REAL A 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 HEALTHCARE REAL i.e., HEALTHCARE REAL and Lifeway Foods go up and down completely randomly.
Pair Corralation between HEALTHCARE REAL and Lifeway Foods
Assuming the 90 days horizon HEALTHCARE REAL A is expected to generate 0.32 times more return on investment than Lifeway Foods. However, HEALTHCARE REAL A is 3.16 times less risky than Lifeway Foods. It trades about 0.3 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.08 per unit of risk. If you would invest 1,541 in HEALTHCARE REAL A on September 4, 2024 and sell it today you would earn a total of 159.00 from holding HEALTHCARE REAL A or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEALTHCARE REAL A vs. Lifeway Foods
Performance |
| Timeline |
| HEALTHCARE REAL A |
| Lifeway Foods |
HEALTHCARE REAL and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEALTHCARE REAL and Lifeway Foods
The main advantage of trading using opposite HEALTHCARE REAL and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHCARE REAL 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.| HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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