Correlation Between Lifeway Foods and Fortive
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Fortive 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 Fortive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Fortive, you can compare the effects of market volatilities on Lifeway Foods and Fortive 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 Fortive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Fortive.
Diversification Opportunities for Lifeway Foods and Fortive
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lifeway and Fortive is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive 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 Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Fortive go up and down completely randomly.
Pair Corralation between Lifeway Foods and Fortive
Assuming the 90 days horizon Lifeway Foods is expected to generate 2.75 times less return on investment than Fortive. In addition to that, Lifeway Foods is 3.94 times more volatile than Fortive. It trades about 0.02 of its total potential returns per unit of risk. Fortive is currently generating about 0.22 per unit of volatility. If you would invest 7,024 in Fortive on September 14, 2024 and sell it today you would earn a total of 384.00 from holding Fortive or generate 5.47% 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. Fortive
Performance |
| Timeline |
| Lifeway Foods |
| Fortive |
Lifeway Foods and Fortive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Fortive
The main advantage of trading using opposite Lifeway Foods and Fortive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Fortive 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 Fortive will offset losses from the drop in Fortive'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 |
| Fortive vs. Lifeway Foods | Fortive vs. SPARTAN STORES | Fortive vs. COFCO Joycome Foods | Fortive vs. JIAHUA STORES |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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