Correlation Between Lifeway Foods and Gossan Resources
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Gossan Resources 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 Gossan Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Gossan Resources, you can compare the effects of market volatilities on Lifeway Foods and Gossan Resources 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 Gossan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Gossan Resources.
Diversification Opportunities for Lifeway Foods and Gossan Resources
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lifeway and Gossan is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Gossan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gossan Resources 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 Gossan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gossan Resources has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Gossan Resources go up and down completely randomly.
Pair Corralation between Lifeway Foods and Gossan Resources
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the Gossan Resources. But the stock apears to be less risky and, when comparing its historical volatility, Lifeway Foods is 22.13 times less risky than Gossan Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Gossan Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.05 in Gossan Resources on October 30, 2024 and sell it today you would lose (0.65) from holding Gossan Resources or give up 61.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 97.37% |
Values | Daily Returns |
Lifeway Foods vs. Gossan Resources
Performance |
Timeline |
Lifeway Foods |
Gossan Resources |
Lifeway Foods and Gossan Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lifeway Foods and Gossan Resources
The main advantage of trading using opposite Lifeway Foods and Gossan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Gossan Resources 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 Gossan Resources will offset losses from the drop in Gossan Resources' long position.Lifeway Foods vs. General Mills | Lifeway Foods vs. Danone SA | Lifeway Foods vs. Hormel Foods | Lifeway Foods vs. Kellogg Company |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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