Correlation Between Cardano and Lifeist Wellness

Can any of the company-specific risk be diversified away by investing in both Cardano and Lifeist Wellness 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 Cardano and Lifeist Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardano and Lifeist Wellness, you can compare the effects of market volatilities on Cardano and Lifeist Wellness 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 Cardano with a short position of Lifeist Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Lifeist Wellness.

Diversification Opportunities for Cardano and Lifeist Wellness

0.46

Correlation Coefficient

Cardano  Lifeist Wellness

Very weak diversification

The 3 months correlation between Cardano and Lifeist is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Lifeist Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeist Wellness and Cardano 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 Cardano are associated (or correlated) with Lifeist Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeist Wellness has no effect on the direction of Cardano i.e., Cardano and Lifeist Wellness go up and down completely randomly.

Pair Corralation between Cardano and Lifeist Wellness

Assuming the 90 days trading horizon Cardano is expected to under-perform the Lifeist Wellness. But the crypto coin apears to be less risky and, when comparing its historical volatility, Cardano is 1.71 times less risky than Lifeist Wellness. The crypto coin trades about -0.01 of its potential returns per unit of risk. The Lifeist Wellness is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.90  in Lifeist Wellness on December 21, 2024 and sell it today you would lose (0.18) from holding Lifeist Wellness or give up 6.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Cardano  vs.  Lifeist Wellness

Cardano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cardano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Cardano shareholders.

Lifeist Wellness

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lifeist Wellness are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Lifeist Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardano and Lifeist Wellness

The main advantage of trading using opposite Cardano and Lifeist Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, Lifeist Wellness 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 Lifeist Wellness will offset losses from the drop in Lifeist Wellness' long position.

The idea behind Cardano and Lifeist Wellness 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.