Correlation Between Lifeway Foods and Real Good
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Real Good 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 Real Good into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Real Good Food, you can compare the effects of market volatilities on Lifeway Foods and Real Good 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 Real Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Real Good.
Diversification Opportunities for Lifeway Foods and Real Good
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lifeway and Real is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Real Good Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Good Food 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 Real Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Good Food has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Real Good go up and down completely randomly.
Pair Corralation between Lifeway Foods and Real Good
Given the investment horizon of 90 days Lifeway Foods is expected to generate 0.92 times more return on investment than Real Good. However, Lifeway Foods is 1.08 times less risky than Real Good. It trades about 0.11 of its potential returns per unit of risk. Real Good Food is currently generating about -0.06 per unit of risk. If you would invest 1,343 in Lifeway Foods on August 30, 2024 and sell it today you would earn a total of 1,138 from holding Lifeway Foods or generate 84.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Real Good Food
Performance |
| Timeline |
| Lifeway Foods |
| Real Good Food |
Lifeway Foods and Real Good Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Real Good
The main advantage of trading using opposite Lifeway Foods and Real Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Real Good 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 Real Good will offset losses from the drop in Real Good's long position.| Lifeway Foods vs. Seneca Foods Corp | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Lifevantage |
| Real Good vs. Bunge Limited | Real Good vs. Cal Maine Foods | Real Good vs. Dole PLC | Real Good vs. Adecoagro 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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