Correlation Between Cadence Bancorp and Lifeist Wellness

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

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

Diversification Opportunities for Cadence Bancorp and Lifeist Wellness

-0.5

Correlation Coefficient

Cadence Bancorp  Lifeist Wellness

Very good diversification

The 3 months correlation between Cadence and Lifeist is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Bancorp and Lifeist Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeist Wellness and Cadence Bancorp 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 Cadence Bancorp 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 Cadence Bancorp i.e., Cadence Bancorp and Lifeist Wellness go up and down completely randomly.

Pair Corralation between Cadence Bancorp and Lifeist Wellness

Given the investment horizon of 90 days Cadence Bancorp is expected to generate 29.35 times less return on investment than Lifeist Wellness. But when comparing it to its historical volatility, Cadence Bancorp is 3.31 times less risky than Lifeist Wellness. It trades about 0.02 of its potential returns per unit of risk. Lifeist Wellness is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2.30  in Lifeist Wellness on October 27, 2024 and sell it today you would earn a total of  0.58  from holding Lifeist Wellness or generate 25.22% return on investment over 90 days.

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

Cadence Bancorp  vs.  Lifeist Wellness

Cadence Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Cadence Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lifeist Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeist Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lifeist Wellness is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cadence Bancorp and Lifeist Wellness

The main advantage of trading using opposite Cadence Bancorp and Lifeist Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Bancorp 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 Cadence Bancorp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.