Correlation Between Lifevantage and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Lifevantage and Emerson Electric 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 Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifevantage and Emerson Electric, you can compare the effects of market volatilities on Lifevantage and Emerson Electric 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 Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifevantage and Emerson Electric.
Diversification Opportunities for Lifevantage and Emerson Electric
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lifevantage and Emerson is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric 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 Emerson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Electric has no effect on the direction of Lifevantage i.e., Lifevantage and Emerson Electric go up and down completely randomly.
Pair Corralation between Lifevantage and Emerson Electric
Given the investment horizon of 90 days Lifevantage is expected to generate 2.78 times more return on investment than Emerson Electric. However, Lifevantage is 2.78 times more volatile than Emerson Electric. It trades about 0.09 of its potential returns per unit of risk. Emerson Electric is currently generating about 0.05 per unit of risk. If you would invest 345.00 in Lifevantage on August 24, 2024 and sell it today you would earn a total of 1,048 from holding Lifevantage or generate 303.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifevantage vs. Emerson Electric
Performance |
| Timeline |
| Lifevantage |
| Emerson Electric |
Lifevantage and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifevantage and Emerson Electric
The main advantage of trading using opposite Lifevantage and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifevantage position performs unexpectedly, Emerson Electric 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 Emerson Electric will offset losses from the drop in Emerson Electric's long position.| Lifevantage vs. Seneca Foods Corp | Lifevantage vs. Central Garden Pet | Lifevantage vs. Central Garden Pet | Lifevantage vs. Associated British Foods |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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