Correlation Between Lifeway Foods and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on Lifeway Foods and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and SCOTT TECHNOLOGY.
Diversification Opportunities for Lifeway Foods and SCOTT TECHNOLOGY
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lifeway and SCOTT is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between Lifeway Foods and SCOTT TECHNOLOGY
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the SCOTT TECHNOLOGY. In addition to that, Lifeway Foods is 1.3 times more volatile than SCOTT TECHNOLOGY. It trades about -0.01 of its total potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.04 per unit of volatility. If you would invest 117.00 in SCOTT TECHNOLOGY on October 11, 2024 and sell it today you would earn a total of 1.00 from holding SCOTT TECHNOLOGY or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| Lifeway Foods |
| SCOTT TECHNOLOGY |
Lifeway Foods and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and SCOTT TECHNOLOGY
The main advantage of trading using opposite Lifeway Foods and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| Lifeway Foods vs. WT OFFSHORE | Lifeway Foods vs. SBM OFFSHORE | Lifeway Foods vs. Xenia Hotels Resorts | Lifeway Foods vs. Shenzhen Investment Limited |
| SCOTT TECHNOLOGY vs. Harmony Gold Mining | SCOTT TECHNOLOGY vs. FIREWEED METALS P | SCOTT TECHNOLOGY vs. Zijin Mining Group | SCOTT TECHNOLOGY vs. Jacquet Metal Service |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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