Correlation Between Lifeway Foods and LODESTAR MIN
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and LODESTAR MIN 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 LODESTAR MIN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and LODESTAR MIN, you can compare the effects of market volatilities on Lifeway Foods and LODESTAR MIN 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 LODESTAR MIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and LODESTAR MIN.
Diversification Opportunities for Lifeway Foods and LODESTAR MIN
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lifeway and LODESTAR is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and LODESTAR MIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LODESTAR MIN 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 LODESTAR MIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LODESTAR MIN has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and LODESTAR MIN go up and down completely randomly.
Pair Corralation between Lifeway Foods and LODESTAR MIN
Assuming the 90 days horizon Lifeway Foods is expected to generate 41.5 times less return on investment than LODESTAR MIN. But when comparing it to its historical volatility, Lifeway Foods is 30.3 times less risky than LODESTAR MIN. It trades about 0.09 of its potential returns per unit of risk. LODESTAR MIN is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.44 in LODESTAR MIN on September 12, 2024 and sell it today you would earn a total of 8.33 from holding LODESTAR MIN or generate 1893.18% 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. LODESTAR MIN
Performance |
| Timeline |
| Lifeway Foods |
| LODESTAR MIN |
Lifeway Foods and LODESTAR MIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and LODESTAR MIN
The main advantage of trading using opposite Lifeway Foods and LODESTAR MIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, LODESTAR MIN 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 LODESTAR MIN will offset losses from the drop in LODESTAR MIN's long position.| Lifeway Foods vs. PennyMac Mortgage Investment | Lifeway Foods vs. Fukuyama Transporting Co | Lifeway Foods vs. Gladstone Investment | Lifeway Foods vs. Big 5 Sporting |
| LODESTAR MIN vs. CANON MARKETING JP | LODESTAR MIN vs. Salesforce | LODESTAR MIN vs. QURATE RETAIL INC | LODESTAR MIN vs. Ross Stores |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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