Correlation Between Lifeway Foods and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Coffee Holding 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 Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Coffee Holding Co, you can compare the effects of market volatilities on Lifeway Foods and Coffee Holding 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 Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Coffee Holding.
Diversification Opportunities for Lifeway Foods and Coffee Holding
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lifeway and Coffee is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding 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 Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Coffee Holding go up and down completely randomly.
Pair Corralation between Lifeway Foods and Coffee Holding
Given the investment horizon of 90 days Lifeway Foods is expected to generate 1.56 times less return on investment than Coffee Holding. In addition to that, Lifeway Foods is 1.06 times more volatile than Coffee Holding Co. It trades about 0.07 of its total potential returns per unit of risk. Coffee Holding Co is currently generating about 0.11 per unit of volatility. If you would invest 118.00 in Coffee Holding Co on October 24, 2024 and sell it today you would earn a total of 256.00 from holding Coffee Holding Co or generate 216.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Coffee Holding Co
Performance |
| Timeline |
| Lifeway Foods |
| Coffee Holding |
Lifeway Foods and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Coffee Holding
The main advantage of trading using opposite Lifeway Foods and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding'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 |
| Coffee Holding vs. Seneca Foods Corp | Coffee Holding vs. J J Snack | Coffee Holding vs. Aryzta AG PK | Coffee Holding vs. Lifeway Foods |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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