Correlation Between VULCAN MATERIALS and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS and Lifeway Foods 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 VULCAN MATERIALS and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and Lifeway Foods, you can compare the effects of market volatilities on VULCAN MATERIALS and Lifeway Foods 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 VULCAN MATERIALS with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and Lifeway Foods.
Diversification Opportunities for VULCAN MATERIALS and Lifeway Foods
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VULCAN and Lifeway is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and VULCAN MATERIALS 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 VULCAN MATERIALS are associated (or correlated) with Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and Lifeway Foods go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and Lifeway Foods
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 14.34 times less return on investment than Lifeway Foods. But when comparing it to its historical volatility, VULCAN MATERIALS is 3.02 times less risky than Lifeway Foods. It trades about 0.01 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,940 in Lifeway Foods on October 12, 2024 and sell it today you would earn a total of 280.00 from holding Lifeway Foods or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VULCAN MATERIALS vs. Lifeway Foods
Performance |
| Timeline |
| VULCAN MATERIALS |
| Lifeway Foods |
VULCAN MATERIALS and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN MATERIALS and Lifeway Foods
The main advantage of trading using opposite VULCAN MATERIALS and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| VULCAN MATERIALS vs. TERADATA | VULCAN MATERIALS vs. Cogent Communications Holdings | VULCAN MATERIALS vs. Cass Information Systems | VULCAN MATERIALS vs. Charter Communications |
| Lifeway Foods vs. WT OFFSHORE | Lifeway Foods vs. SBM OFFSHORE | Lifeway Foods vs. Xenia Hotels Resorts | Lifeway Foods vs. Shenzhen Investment Limited |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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