Correlation Between GeoVax Labs and Lexaria Bioscience

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

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

Diversification Opportunities for GeoVax Labs and Lexaria Bioscience

0.17

Correlation Coefficient

GeoVax Labs  Lexaria Bioscience

Average diversification

The 3 months correlation between GeoVax and Lexaria is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GeoVax Labs and Lexaria Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexaria Bioscience Corp and GeoVax Labs 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 GeoVax Labs are associated (or correlated) with Lexaria Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexaria Bioscience Corp has no effect on the direction of GeoVax Labs i.e., GeoVax Labs and Lexaria Bioscience go up and down completely randomly.

Pair Corralation between GeoVax Labs and Lexaria Bioscience

Assuming the 90 days horizon GeoVax Labs is expected to generate 5.19 times more return on investment than Lexaria Bioscience. However, GeoVax Labs is 5.19 times more volatile than Lexaria Bioscience Corp. It trades about 0.11 of its potential returns per unit of risk. Lexaria Bioscience Corp is currently generating about -0.16 per unit of risk. If you would invest  11.00  in GeoVax Labs on October 20, 2024 and sell it today you would earn a total of  1.00  from holding GeoVax Labs or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.0%
Values	Daily Returns

GeoVax Labs  vs.  Lexaria Bioscience Corp

GeoVax Labs

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GeoVax Labs are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, GeoVax Labs showed solid returns over the last few months and may actually be approaching a breakup point.

Lexaria Bioscience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lexaria Bioscience Corp 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GeoVax Labs and Lexaria Bioscience

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

The idea behind GeoVax Labs and Lexaria Bioscience Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.