Correlation Between Lifeway Foods and Forafric Global
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Forafric Global 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 Lifeway Foods and Forafric Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Forafric Global PLC, you can compare the effects of market volatilities on Lifeway Foods and Forafric Global 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 Lifeway Foods with a short position of Forafric Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Forafric Global.
Diversification Opportunities for Lifeway Foods and Forafric Global
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lifeway and Forafric is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Forafric Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forafric Global PLC and Lifeway Foods 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 Lifeway Foods are associated (or correlated) with Forafric Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forafric Global PLC has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Forafric Global go up and down completely randomly.
Pair Corralation between Lifeway Foods and Forafric Global
Given the investment horizon of 90 days Lifeway Foods is expected to generate 1.3 times more return on investment than Forafric Global. However, Lifeway Foods is 1.3 times more volatile than Forafric Global PLC. It trades about -0.03 of its potential returns per unit of risk. Forafric Global PLC is currently generating about -0.25 per unit of risk. If you would invest 2,322 in Lifeway Foods on November 5, 2024 and sell it today you would lose (18.00) from holding Lifeway Foods or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Forafric Global PLC
Performance |
| Timeline |
| Lifeway Foods |
| Forafric Global PLC |
Lifeway Foods and Forafric Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Forafric Global
The main advantage of trading using opposite Lifeway Foods and Forafric Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Forafric Global 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 Forafric Global will offset losses from the drop in Forafric Global's long position.| Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Lifevantage | Lifeway Foods vs. Seneca Foods Corp |
| Forafric Global vs. Forafric Global PLC | Forafric Global vs. GrainCorp Limited | Forafric Global vs. Australian Agricultural | Forafric Global vs. Fresh Del Monte |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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