Correlation Between Lexaria Bioscience and Evogene

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

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

Diversification Opportunities for Lexaria Bioscience and Evogene

0.13

Correlation Coefficient

Lexaria Bioscience  Evogene

Average diversification

The 3 months correlation between Lexaria and Evogene is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lexaria Bioscience Corp and Evogene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evogene and Lexaria Bioscience 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 Lexaria Bioscience Corp are associated (or correlated) with Evogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evogene has no effect on the direction of Lexaria Bioscience i.e., Lexaria Bioscience and Evogene go up and down completely randomly.

Pair Corralation between Lexaria Bioscience and Evogene

Given the investment horizon of 90 days Lexaria Bioscience Corp is expected to under-perform the Evogene. In addition to that, Lexaria Bioscience is 1.01 times more volatile than Evogene. It trades about -0.09 of its total potential returns per unit of risk. Evogene is currently generating about -0.02 per unit of volatility. If you would invest  161.00  in Evogene on November 28, 2024 and sell it today you would lose (19.00) from holding Evogene or give up 11.8% of portfolio value over 90 days.

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

Lexaria Bioscience Corp  vs.  Evogene

Lexaria Bioscience Corp

Risk-Adjusted Performance

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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Evogene

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evogene has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Evogene is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lexaria Bioscience and Evogene

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

The idea behind Lexaria Bioscience Corp and Evogene 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.