Correlation Between CARGOJET INC and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both CARGOJET INC 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 CARGOJET INC and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARGOJET INC VAR and Lifeway Foods, you can compare the effects of market volatilities on CARGOJET INC 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 CARGOJET INC with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARGOJET INC and Lifeway Foods.
Diversification Opportunities for CARGOJET INC and Lifeway Foods
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CARGOJET and Lifeway is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CARGOJET INC VAR and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and CARGOJET INC 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 CARGOJET INC VAR 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 CARGOJET INC i.e., CARGOJET INC and Lifeway Foods go up and down completely randomly.
Pair Corralation between CARGOJET INC and Lifeway Foods
Assuming the 90 days trading horizon CARGOJET INC VAR is expected to under-perform the Lifeway Foods. In addition to that, CARGOJET INC is 1.21 times more volatile than Lifeway Foods. It trades about -0.14 of its total potential returns per unit of risk. Lifeway Foods is currently generating about -0.16 per unit of volatility. If you would invest 2,400 in Lifeway Foods on December 4, 2024 and sell it today you would lose (400.00) from holding Lifeway Foods or give up 16.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CARGOJET INC VAR vs. Lifeway Foods
Performance |
Timeline |
CARGOJET INC VAR |
Lifeway Foods |
CARGOJET INC and Lifeway Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CARGOJET INC and Lifeway Foods
The main advantage of trading using opposite CARGOJET INC and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARGOJET INC 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.CARGOJET INC vs. WESANA HEALTH HOLD | CARGOJET INC vs. CLOVER HEALTH INV | CARGOJET INC vs. PURETECH HEALTH PLC | CARGOJET INC vs. Molina Healthcare |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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