Correlation Between Lifeway Foods and TITAN MACHINERY
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and TITAN MACHINERY 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 TITAN MACHINERY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and TITAN MACHINERY, you can compare the effects of market volatilities on Lifeway Foods and TITAN MACHINERY 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 TITAN MACHINERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and TITAN MACHINERY.
Diversification Opportunities for Lifeway Foods and TITAN MACHINERY
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lifeway and TITAN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and TITAN MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITAN MACHINERY 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 TITAN MACHINERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITAN MACHINERY has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and TITAN MACHINERY go up and down completely randomly.
Pair Corralation between Lifeway Foods and TITAN MACHINERY
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the TITAN MACHINERY. In addition to that, Lifeway Foods is 1.47 times more volatile than TITAN MACHINERY. It trades about -0.02 of its total potential returns per unit of risk. TITAN MACHINERY is currently generating about 0.22 per unit of volatility. If you would invest 1,250 in TITAN MACHINERY on September 2, 2024 and sell it today you would earn a total of 230.00 from holding TITAN MACHINERY or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. TITAN MACHINERY
Performance |
| Timeline |
| Lifeway Foods |
| TITAN MACHINERY |
Lifeway Foods and TITAN MACHINERY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and TITAN MACHINERY
The main advantage of trading using opposite Lifeway Foods and TITAN MACHINERY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, TITAN MACHINERY 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 TITAN MACHINERY will offset losses from the drop in TITAN MACHINERY's long position.| Lifeway Foods vs. Danone SA | Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. NMI Holdings | Lifeway Foods vs. Origin Agritech |
| TITAN MACHINERY vs. SIVERS SEMICONDUCTORS AB | TITAN MACHINERY vs. Darden Restaurants | TITAN MACHINERY vs. Reliance Steel Aluminum | TITAN MACHINERY vs. Q2M Managementberatung AG |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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