Correlation Between International Consolidated and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Lifeway Foods, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Lifeway Foods.
Diversification Opportunities for International Consolidated and Lifeway Foods
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Lifeway is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Lifeway Foods go up and down completely randomly.
Pair Corralation between International Consolidated and Lifeway Foods
Assuming the 90 days horizon International Consolidated is expected to generate 1.74 times less return on investment than Lifeway Foods. But when comparing it to its historical volatility, International Consolidated Airlines is 2.85 times less risky than Lifeway Foods. It trades about 0.18 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,250 in Lifeway Foods on September 3, 2024 and sell it today you would earn a total of 1,090 from holding Lifeway Foods or generate 87.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Lifeway Foods
Performance |
| Timeline |
| International Consolidated |
| Lifeway Foods |
International Consolidated and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Lifeway Foods
The main advantage of trading using opposite International Consolidated and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Delta Air Lines | International Consolidated vs. AIR CHINA LTD | International Consolidated vs. RYANAIR HLDGS ADR | International Consolidated vs. Southwest Airlines Co |
| Lifeway Foods vs. Nestl SA | Lifeway Foods vs. Kraft Heinz Co | Lifeway Foods vs. General Mills | Lifeway Foods vs. Kellogg Company |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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