Correlation Between Lifevantage and Balchem
Can any of the company-specific risk be diversified away by investing in both Lifevantage and Balchem 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 Lifevantage and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifevantage and Balchem, you can compare the effects of market volatilities on Lifevantage and Balchem 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 Lifevantage with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifevantage and Balchem.
Diversification Opportunities for Lifevantage and Balchem
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lifevantage and Balchem is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Lifevantage 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 Lifevantage are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Lifevantage i.e., Lifevantage and Balchem go up and down completely randomly.
Pair Corralation between Lifevantage and Balchem
Given the investment horizon of 90 days Lifevantage is expected to generate 1.25 times less return on investment than Balchem. In addition to that, Lifevantage is 2.28 times more volatile than Balchem. It trades about 0.07 of its total potential returns per unit of risk. Balchem is currently generating about 0.21 per unit of volatility. If you would invest 16,676 in Balchem on August 24, 2024 and sell it today you would earn a total of 1,376 from holding Balchem or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifevantage vs. Balchem
Performance |
| Timeline |
| Lifevantage |
| Balchem |
Lifevantage and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifevantage and Balchem
The main advantage of trading using opposite Lifevantage and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifevantage position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.| Lifevantage vs. Seneca Foods Corp | Lifevantage vs. Central Garden Pet | Lifevantage vs. Central Garden Pet | Lifevantage vs. Associated British Foods |
| Balchem vs. Eshallgo Class A | Balchem vs. Amtech Systems | Balchem vs. Gold Fields Ltd | Balchem vs. Aegean Airlines SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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