Correlation Between LIFEWAY FOODS and Axfood AB
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS and Axfood AB 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 Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and Axfood AB, you can compare the effects of market volatilities on LIFEWAY FOODS and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Axfood AB.
Diversification Opportunities for LIFEWAY FOODS and Axfood AB
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LIFEWAY and Axfood is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Axfood AB go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and Axfood AB
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 2.45 times more return on investment than Axfood AB. However, LIFEWAY FOODS is 2.45 times more volatile than Axfood AB. It trades about 0.08 of its potential returns per unit of risk. Axfood AB is currently generating about 0.05 per unit of risk. If you would invest 1,030 in LIFEWAY FOODS on September 14, 2024 and sell it today you would earn a total of 1,250 from holding LIFEWAY FOODS or generate 121.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
LIFEWAY FOODS vs. Axfood AB
Performance |
| Timeline |
| LIFEWAY FOODS |
| Axfood AB |
LIFEWAY FOODS and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and Axfood AB
The main advantage of trading using opposite LIFEWAY FOODS and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| LIFEWAY FOODS vs. PKSHA TECHNOLOGY INC | LIFEWAY FOODS vs. National Beverage Corp | LIFEWAY FOODS vs. SOFI TECHNOLOGIES | LIFEWAY FOODS vs. HF FOODS GRP |
| Axfood AB vs. NISSIN FOODS HLDGS | Axfood AB vs. LIFEWAY FOODS | Axfood AB vs. Flowers Foods | Axfood AB vs. MOLSON RS BEVERAGE |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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