Correlation Between Lifeway Foods and SHIP HEALTHCARE
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and SHIP HEALTHCARE 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 SHIP HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and SHIP HEALTHCARE HLDGINC, you can compare the effects of market volatilities on Lifeway Foods and SHIP HEALTHCARE 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 SHIP HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and SHIP HEALTHCARE.
Diversification Opportunities for Lifeway Foods and SHIP HEALTHCARE
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifeway and SHIP is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and SHIP HEALTHCARE HLDGINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIP HEALTHCARE HLDGINC has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and SHIP HEALTHCARE go up and down completely randomly.
Pair Corralation between Lifeway Foods and SHIP HEALTHCARE
Assuming the 90 days horizon Lifeway Foods is expected to generate 2.64 times more return on investment than SHIP HEALTHCARE. However, Lifeway Foods is 2.64 times more volatile than SHIP HEALTHCARE HLDGINC. It trades about 0.08 of its potential returns per unit of risk. SHIP HEALTHCARE HLDGINC is currently generating about 0.04 per unit of risk. If you would invest 2,200 in Lifeway Foods on September 4, 2024 and sell it today you would earn a total of 140.00 from holding Lifeway Foods or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lifeway Foods vs. SHIP HEALTHCARE HLDGINC
Performance |
| Timeline |
| Lifeway Foods |
| SHIP HEALTHCARE HLDGINC |
Lifeway Foods and SHIP HEALTHCARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and SHIP HEALTHCARE
The main advantage of trading using opposite Lifeway Foods and SHIP HEALTHCARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, SHIP HEALTHCARE 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 SHIP HEALTHCARE will offset losses from the drop in SHIP HEALTHCARE's long position.| Lifeway Foods vs. Nestl SA | Lifeway Foods vs. Kraft Heinz Co | Lifeway Foods vs. General Mills | Lifeway Foods vs. Kellogg Company |
| SHIP HEALTHCARE vs. THRACE PLASTICS | SHIP HEALTHCARE vs. Rayonier Advanced Materials | SHIP HEALTHCARE vs. SANOK RUBBER ZY | SHIP HEALTHCARE vs. Gruppo Mutuionline SpA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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