Correlation Between Lifeway Foods and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Granite Construction 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 Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Granite Construction, you can compare the effects of market volatilities on Lifeway Foods and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Granite Construction.
Diversification Opportunities for Lifeway Foods and Granite Construction
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lifeway and Granite is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Granite Construction go up and down completely randomly.
Pair Corralation between Lifeway Foods and Granite Construction
Assuming the 90 days horizon Lifeway Foods is expected to generate 1.11 times less return on investment than Granite Construction. In addition to that, Lifeway Foods is 3.98 times more volatile than Granite Construction. It trades about 0.01 of its total potential returns per unit of risk. Granite Construction is currently generating about 0.05 per unit of volatility. If you would invest 9,150 in Granite Construction on September 13, 2024 and sell it today you would earn a total of 100.00 from holding Granite Construction or generate 1.09% 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. Granite Construction
Performance |
| Timeline |
| Lifeway Foods |
| Granite Construction |
Lifeway Foods and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Granite Construction
The main advantage of trading using opposite Lifeway Foods and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction'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 |
| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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