Correlation Between Lifeway Foods and Universal Entertainment
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Universal Entertainment 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 Universal Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Universal Entertainment, you can compare the effects of market volatilities on Lifeway Foods and Universal Entertainment 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Universal Entertainment.
Diversification Opportunities for Lifeway Foods and Universal Entertainment
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifeway and Universal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Universal Entertainment go up and down completely randomly.
Pair Corralation between Lifeway Foods and Universal Entertainment
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the Universal Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Lifeway Foods is 1.28 times less risky than Universal Entertainment. The stock trades about -0.05 of its potential returns per unit of risk. The Universal Entertainment is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 595.00 in Universal Entertainment on October 20, 2024 and sell it today you would earn a total of 55.00 from holding Universal Entertainment or generate 9.24% 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. Universal Entertainment
Performance |
| Timeline |
| Lifeway Foods |
| Universal Entertainment |
Lifeway Foods and Universal Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Universal Entertainment
The main advantage of trading using opposite Lifeway Foods and Universal Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Universal Entertainment 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 Universal Entertainment will offset losses from the drop in Universal Entertainment's long position.| Lifeway Foods vs. Tyson Foods | Lifeway Foods vs. TYSON FOODS A | Lifeway Foods vs. MTY Food Group | Lifeway Foods vs. Benchmark Electronics |
| Universal Entertainment vs. USWE SPORTS AB | Universal Entertainment vs. Luckin Coffee | Universal Entertainment vs. TRAVEL LEISURE DL 01 | Universal Entertainment vs. PT Wintermar Offshore |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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