Correlation Between Lifevantage and Big Tree
Can any of the company-specific risk be diversified away by investing in both Lifevantage and Big Tree 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 Big Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifevantage and Big Tree Cloud, you can compare the effects of market volatilities on Lifevantage and Big Tree 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 Big Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifevantage and Big Tree.
Diversification Opportunities for Lifevantage and Big Tree
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lifevantage and Big is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Big Tree Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Tree Cloud 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 Big Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Tree Cloud has no effect on the direction of Lifevantage i.e., Lifevantage and Big Tree go up and down completely randomly.
Pair Corralation between Lifevantage and Big Tree
Given the investment horizon of 90 days Lifevantage is expected to generate 3.26 times less return on investment than Big Tree. But when comparing it to its historical volatility, Lifevantage is 3.34 times less risky than Big Tree. It trades about 0.05 of its potential returns per unit of risk. Big Tree Cloud is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.15 in Big Tree Cloud on August 28, 2024 and sell it today you would lose (0.15) from holding Big Tree Cloud or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifevantage vs. Big Tree Cloud
Performance |
| Timeline |
| Lifevantage |
| Big Tree Cloud |
Lifevantage and Big Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifevantage and Big Tree
The main advantage of trading using opposite Lifevantage and Big Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifevantage position performs unexpectedly, Big Tree 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 Big Tree will offset losses from the drop in Big Tree's long position.| Lifevantage vs. Seneca Foods Corp | Lifevantage vs. Central Garden Pet | Lifevantage vs. Central Garden Pet | Lifevantage vs. Lifeway Foods |
| Big Tree vs. Colgate Palmolive | Big Tree vs. Estee Lauder Companies | Big Tree vs. Procter Gamble | Big Tree vs. United Guardian |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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