Correlation Between Lifeway Foods and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and STORE ELECTRONIC 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 STORE ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and STORE ELECTRONIC, you can compare the effects of market volatilities on Lifeway Foods and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and STORE ELECTRONIC.
Diversification Opportunities for Lifeway Foods and STORE ELECTRONIC
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lifeway and STORE is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between Lifeway Foods and STORE ELECTRONIC
Assuming the 90 days horizon Lifeway Foods is expected to generate 1.08 times more return on investment than STORE ELECTRONIC. However, Lifeway Foods is 1.08 times more volatile than STORE ELECTRONIC. It trades about 0.08 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.03 per unit of risk. If you would invest 630.00 in Lifeway Foods on August 29, 2024 and sell it today you would earn a total of 1,670 from holding Lifeway Foods or generate 265.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. STORE ELECTRONIC
Performance |
| Timeline |
| Lifeway Foods |
| STORE ELECTRONIC |
Lifeway Foods and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and STORE ELECTRONIC
The main advantage of trading using opposite Lifeway Foods and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC'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 |
| STORE ELECTRONIC vs. UNITED RENTALS | STORE ELECTRONIC vs. Astral Foods Limited | STORE ELECTRONIC vs. Coor Service Management | STORE ELECTRONIC vs. SENECA FOODS A |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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