Correlation Between Lifeway Foods and Vossloh AG
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Vossloh AG 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 Vossloh AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Vossloh AG, you can compare the effects of market volatilities on Lifeway Foods and Vossloh AG 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 Vossloh AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Vossloh AG.
Diversification Opportunities for Lifeway Foods and Vossloh AG
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lifeway and Vossloh is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Vossloh AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vossloh AG 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 Vossloh AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vossloh AG has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Vossloh AG go up and down completely randomly.
Pair Corralation between Lifeway Foods and Vossloh AG
Assuming the 90 days horizon Lifeway Foods is expected to generate 3.82 times more return on investment than Vossloh AG. However, Lifeway Foods is 3.82 times more volatile than Vossloh AG. It trades about 0.01 of its potential returns per unit of risk. Vossloh AG is currently generating about 0.02 per unit of risk. If you would invest 2,260 in Lifeway Foods on September 13, 2024 and sell it today you would lose (20.00) from holding Lifeway Foods or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lifeway Foods vs. Vossloh AG
Performance |
| Timeline |
| Lifeway Foods |
| Vossloh AG |
Lifeway Foods and Vossloh AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Vossloh AG
The main advantage of trading using opposite Lifeway Foods and Vossloh AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Vossloh AG 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 Vossloh AG will offset losses from the drop in Vossloh AG's long position.| Lifeway Foods vs. PennyMac Mortgage Investment | Lifeway Foods vs. Fukuyama Transporting Co | Lifeway Foods vs. Gladstone Investment | Lifeway Foods vs. Big 5 Sporting |
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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 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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