Correlation Between Lifeway Foods and Performance Food
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Performance Food 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 Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Performance Food Group, you can compare the effects of market volatilities on Lifeway Foods and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Performance Food.
Diversification Opportunities for Lifeway Foods and Performance Food
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lifeway and Performance is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Performance Food go up and down completely randomly.
Pair Corralation between Lifeway Foods and Performance Food
Assuming the 90 days horizon Lifeway Foods is expected to generate 3.61 times more return on investment than Performance Food. However, Lifeway Foods is 3.61 times more volatile than Performance Food Group. It trades about 0.07 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.08 per unit of risk. If you would invest 1,200 in Lifeway Foods on August 25, 2024 and sell it today you would earn a total of 1,060 from holding Lifeway Foods or generate 88.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Performance Food Group
Performance |
| Timeline |
| Lifeway Foods |
| Performance Food |
Lifeway Foods and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Performance Food
The main advantage of trading using opposite Lifeway Foods and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. NMI Holdings | Lifeway Foods vs. Origin Agritech | Lifeway Foods vs. SIVERS SEMICONDUCTORS AB |
| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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