Correlation Between Lifeway Foods and Arcosa
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Arcosa 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 Arcosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Arcosa Inc, you can compare the effects of market volatilities on Lifeway Foods and Arcosa 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 Arcosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Arcosa.
Diversification Opportunities for Lifeway Foods and Arcosa
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifeway and Arcosa is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Arcosa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcosa 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 Arcosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcosa Inc has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Arcosa go up and down completely randomly.
Pair Corralation between Lifeway Foods and Arcosa
Assuming the 90 days horizon Lifeway Foods is expected to generate 2.76 times more return on investment than Arcosa. However, Lifeway Foods is 2.76 times more volatile than Arcosa Inc. It trades about 0.07 of its potential returns per unit of risk. Arcosa Inc is currently generating about 0.08 per unit of risk. If you would invest 1,240 in Lifeway Foods on September 2, 2024 and sell it today you would earn a total of 1,100 from holding Lifeway Foods or generate 88.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Arcosa Inc
Performance |
| Timeline |
| Lifeway Foods |
| Arcosa Inc |
Lifeway Foods and Arcosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Arcosa
The main advantage of trading using opposite Lifeway Foods and Arcosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Arcosa 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 Arcosa will offset losses from the drop in Arcosa's long position.| Lifeway Foods vs. Danone SA | Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. NMI Holdings | Lifeway Foods vs. Origin Agritech |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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