Correlation Between Lifeway Foods and Dollar General
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Dollar General 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 Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Dollar General, you can compare the effects of market volatilities on Lifeway Foods and Dollar General 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 Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Dollar General.
Diversification Opportunities for Lifeway Foods and Dollar General
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lifeway and Dollar is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Dollar General go up and down completely randomly.
Pair Corralation between Lifeway Foods and Dollar General
Assuming the 90 days horizon Lifeway Foods is expected to generate 1.81 times more return on investment than Dollar General. However, Lifeway Foods is 1.81 times more volatile than Dollar General. It trades about 0.08 of its potential returns per unit of risk. Dollar General is currently generating about 0.09 per unit of risk. If you would invest 2,180 in Lifeway Foods on September 15, 2024 and sell it today you would earn a total of 120.00 from holding Lifeway Foods or generate 5.5% 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. Dollar General
Performance |
| Timeline |
| Lifeway Foods |
| Dollar General |
Lifeway Foods and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Dollar General
The main advantage of trading using opposite Lifeway Foods and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Dollar General 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 Dollar General will offset losses from the drop in Dollar General's long position.| Lifeway Foods vs. Hormel Foods | Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. SIVERS SEMICONDUCTORS AB | Lifeway Foods vs. NorAm Drilling AS |
| Dollar General vs. Sumitomo Rubber Industries | Dollar General vs. Astral Foods Limited | Dollar General vs. Lifeway Foods | Dollar General vs. PREMIER FOODS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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