Correlation Between Lifeway Foods and Erste Group
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Erste Group 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 Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Erste Group Bank, you can compare the effects of market volatilities on Lifeway Foods and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Erste Group.
Diversification Opportunities for Lifeway Foods and Erste Group
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lifeway and Erste is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Erste Group go up and down completely randomly.
Pair Corralation between Lifeway Foods and Erste Group
Assuming the 90 days horizon Lifeway Foods is expected to generate 1.61 times less return on investment than Erste Group. In addition to that, Lifeway Foods is 3.31 times more volatile than Erste Group Bank. It trades about 0.06 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.34 per unit of volatility. If you would invest 5,268 in Erste Group Bank on October 16, 2024 and sell it today you would earn a total of 804.00 from holding Erste Group Bank or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
Lifeway Foods vs. Erste Group Bank
Performance |
| Timeline |
| Lifeway Foods |
| Erste Group Bank |
Lifeway Foods and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Erste Group
The main advantage of trading using opposite Lifeway Foods and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Lifeway Foods vs. MACOM Technology Solutions | Lifeway Foods vs. Firan Technology Group | Lifeway Foods vs. BOS BETTER ONLINE | Lifeway Foods vs. YATRA ONLINE DL 0001 |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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