Correlation Between Lifeway Foods and HF FOODS
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and HF FOODS 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 HF FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and HF FOODS GRP, you can compare the effects of market volatilities on Lifeway Foods and HF FOODS 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 HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and HF FOODS.
Diversification Opportunities for Lifeway Foods and HF FOODS
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifeway and 3GX is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and HF FOODS go up and down completely randomly.
Pair Corralation between Lifeway Foods and HF FOODS
Assuming the 90 days horizon Lifeway Foods is expected to generate 1.41 times more return on investment than HF FOODS. However, Lifeway Foods is 1.41 times more volatile than HF FOODS GRP. It trades about 0.07 of its potential returns per unit of risk. HF FOODS GRP is currently generating about -0.01 per unit of risk. If you would invest 1,190 in Lifeway Foods on September 4, 2024 and sell it today you would earn a total of 1,150 from holding Lifeway Foods or generate 96.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. HF FOODS GRP
Performance |
| Timeline |
| Lifeway Foods |
| HF FOODS GRP |
Lifeway Foods and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and HF FOODS
The main advantage of trading using opposite Lifeway Foods and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.| Lifeway Foods vs. Nestl SA | Lifeway Foods vs. Kraft Heinz Co | Lifeway Foods vs. General Mills | Lifeway Foods vs. Kellogg Company |
| HF FOODS vs. Performance Food Group | HF FOODS vs. Superior Plus Corp | HF FOODS vs. NMI Holdings | HF FOODS vs. Origin Agritech |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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