Correlation Between BranchOut Food and Lifeway Foods

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

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

Diversification Opportunities for BranchOut Food and Lifeway Foods

-0.54

Correlation Coefficient

BranchOut Food  Lifeway Foods

Excellent diversification

The 3 months correlation between BranchOut and Lifeway is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BranchOut Food Common and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and BranchOut Food 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 BranchOut Food Common 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 BranchOut Food i.e., BranchOut Food and Lifeway Foods go up and down completely randomly.

Pair Corralation between BranchOut Food and Lifeway Foods

Considering the 90-day investment horizon BranchOut Food Common is expected to generate 2.19 times more return on investment than Lifeway Foods. However, BranchOut Food is 2.19 times more volatile than Lifeway Foods. It trades about 0.06 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.13 per unit of risk. If you would invest  171.00  in BranchOut Food Common on November 27, 2024 and sell it today you would earn a total of  17.00  from holding BranchOut Food Common or generate 9.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BranchOut Food Common  vs.  Lifeway Foods

BranchOut Food Common

Risk-Adjusted Performance

Insignificant

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

Lifeway Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifeway Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BranchOut Food and Lifeway Foods

The main advantage of trading using opposite BranchOut Food and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BranchOut Food 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.

The idea behind BranchOut Food Common and Lifeway Foods 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.