Correlation Between Nova Lifestyle and Lifetime Brands
Can any of the company-specific risk be diversified away by investing in both Nova Lifestyle and Lifetime Brands 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 Nova Lifestyle and Lifetime Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Lifestyle I and Lifetime Brands, you can compare the effects of market volatilities on Nova Lifestyle and Lifetime Brands 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 Nova Lifestyle with a short position of Lifetime Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Lifestyle and Lifetime Brands.
Diversification Opportunities for Nova Lifestyle and Lifetime Brands
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nova and Lifetime is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nova Lifestyle I and Lifetime Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifetime Brands and Nova Lifestyle 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 Nova Lifestyle I are associated (or correlated) with Lifetime Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifetime Brands has no effect on the direction of Nova Lifestyle i.e., Nova Lifestyle and Lifetime Brands go up and down completely randomly.
Pair Corralation between Nova Lifestyle and Lifetime Brands
Given the investment horizon of 90 days Nova Lifestyle I is expected to under-perform the Lifetime Brands. In addition to that, Nova Lifestyle is 2.51 times more volatile than Lifetime Brands. It trades about -0.39 of its total potential returns per unit of risk. Lifetime Brands is currently generating about 0.19 per unit of volatility. If you would invest 525.00 in Lifetime Brands on August 28, 2024 and sell it today you would earn a total of 64.00 from holding Lifetime Brands or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Lifestyle I vs. Lifetime Brands
Performance |
| Timeline |
| Nova Lifestyle I |
| Lifetime Brands |
Nova Lifestyle and Lifetime Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Lifestyle and Lifetime Brands
The main advantage of trading using opposite Nova Lifestyle and Lifetime Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Lifestyle position performs unexpectedly, Lifetime Brands 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 Lifetime Brands will offset losses from the drop in Lifetime Brands' long position.The idea behind Nova Lifestyle I and Lifetime Brands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lifetime Brands vs. Bassett Furniture Industries | Lifetime Brands vs. Flexsteel Industries | Lifetime Brands vs. Hamilton Beach Brands | Lifetime Brands vs. Natuzzi SpA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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