Correlation Between Lifeway Foods and Canon
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Canon 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 Canon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Canon Inc, you can compare the effects of market volatilities on Lifeway Foods and Canon 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 Canon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Canon.
Diversification Opportunities for Lifeway Foods and Canon
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lifeway and Canon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc 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 Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Canon go up and down completely randomly.
Pair Corralation between Lifeway Foods and Canon
Assuming the 90 days horizon Lifeway Foods is expected to generate 2.65 times less return on investment than Canon. In addition to that, Lifeway Foods is 2.85 times more volatile than Canon Inc. It trades about 0.01 of its total potential returns per unit of risk. Canon Inc is currently generating about 0.08 per unit of volatility. If you would invest 3,029 in Canon Inc on September 13, 2024 and sell it today you would earn a total of 81.00 from holding Canon Inc or generate 2.67% 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. Canon Inc
Performance |
| Timeline |
| Lifeway Foods |
| Canon Inc |
Lifeway Foods and Canon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Canon
The main advantage of trading using opposite Lifeway Foods and Canon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Canon 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 Canon will offset losses from the drop in Canon's long position.| Lifeway Foods vs. PennyMac Mortgage Investment | Lifeway Foods vs. Fukuyama Transporting Co | Lifeway Foods vs. Gladstone Investment | Lifeway Foods vs. Big 5 Sporting |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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