Correlation Between Lifeway Foods and BII Railway
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and BII Railway 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 BII Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and BII Railway Transportation, you can compare the effects of market volatilities on Lifeway Foods and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and BII Railway.
Diversification Opportunities for Lifeway Foods and BII Railway
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lifeway and BII is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and BII Railway go up and down completely randomly.
Pair Corralation between Lifeway Foods and BII Railway
Assuming the 90 days horizon Lifeway Foods is expected to generate 1.89 times more return on investment than BII Railway. However, Lifeway Foods is 1.89 times more volatile than BII Railway Transportation. It trades about 0.12 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.01 per unit of risk. If you would invest 1,180 in Lifeway Foods on September 29, 2024 and sell it today you would earn a total of 1,040 from holding Lifeway Foods or generate 88.14% 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. BII Railway Transportation
Performance |
| Timeline |
| Lifeway Foods |
| BII Railway Transpor |
Lifeway Foods and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and BII Railway
The main advantage of trading using opposite Lifeway Foods and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Lifeway Foods vs. PSI Software AG | Lifeway Foods vs. Consolidated Communications Holdings | Lifeway Foods vs. Major Drilling Group | Lifeway Foods vs. Shenandoah Telecommunications |
| BII Railway vs. Meiko Electronics Co | BII Railway vs. New Residential Investment | BII Railway vs. SLR Investment Corp | BII Railway vs. Nucletron Electronic Aktiengesellschaft |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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