Correlation Between Cadiz Depositary and LifeMD Preferred

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

By analyzing existing cross correlation between Cadiz Depositary Shares and LifeMD Preferred Series, you can compare the effects of market volatilities on Cadiz Depositary and LifeMD Preferred 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 Cadiz Depositary with a short position of LifeMD Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and LifeMD Preferred.

Diversification Opportunities for Cadiz Depositary and LifeMD Preferred

0.55

Correlation Coefficient

Cadiz Depositary  LifeMD Preferred

Very weak diversification

The 3 months correlation between Cadiz and LifeMD is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and LifeMD Preferred Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeMD Preferred Series and Cadiz Depositary 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 Cadiz Depositary Shares are associated (or correlated) with LifeMD Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeMD Preferred Series has no effect on the direction of Cadiz Depositary i.e., Cadiz Depositary and LifeMD Preferred go up and down completely randomly.

Pair Corralation between Cadiz Depositary and LifeMD Preferred

Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 0.78 times more return on investment than LifeMD Preferred. However, Cadiz Depositary Shares is 1.29 times less risky than LifeMD Preferred. It trades about 0.38 of its potential returns per unit of risk. LifeMD Preferred Series is currently generating about 0.09 per unit of risk. If you would invest  1,521  in Cadiz Depositary Shares on August 31, 2024 and sell it today you would earn a total of  170.00  from holding Cadiz Depositary Shares or generate 11.18% return on investment over 90 days.

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

Cadiz Depositary Shares  vs.  LifeMD Preferred Series

Cadiz Depositary Shares

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cadiz Depositary Shares are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Cadiz Depositary reported solid returns over the last few months and may actually be approaching a breakup point.

LifeMD Preferred Series

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LifeMD Preferred Series are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, LifeMD Preferred is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cadiz Depositary and LifeMD Preferred

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

The idea behind Cadiz Depositary Shares and LifeMD Preferred Series 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.