Correlation Between Lexaria Bioscience and GeoVax Labs

Can any of the company-specific risk be diversified away by investing in both Lexaria Bioscience and GeoVax Labs 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 GeoVax Labs 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 GeoVax Labs, you can compare the effects of market volatilities on Lexaria Bioscience and GeoVax Labs 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 GeoVax Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexaria Bioscience and GeoVax Labs.

Diversification Opportunities for Lexaria Bioscience and GeoVax Labs

0.67

Correlation Coefficient

Lexaria Bioscience  GeoVax Labs

Poor diversification

The 3 months correlation between Lexaria and GeoVax is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lexaria Bioscience Corp and GeoVax Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVax Labs 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 GeoVax Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVax Labs has no effect on the direction of Lexaria Bioscience i.e., Lexaria Bioscience and GeoVax Labs go up and down completely randomly.

Pair Corralation between Lexaria Bioscience and GeoVax Labs

Given the investment horizon of 90 days Lexaria Bioscience Corp is expected to under-perform the GeoVax Labs. But the stock apears to be less risky and, when comparing its historical volatility, Lexaria Bioscience Corp is 3.18 times less risky than GeoVax Labs. The stock trades about -0.12 of its potential returns per unit of risk. The GeoVax Labs is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  21.00  in GeoVax Labs on September 14, 2024 and sell it today you would lose (10.00) from holding GeoVax Labs or give up 47.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Lexaria Bioscience Corp  vs.  GeoVax Labs

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

GeoVax Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GeoVax Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Lexaria Bioscience and GeoVax Labs

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

The idea behind Lexaria Bioscience Corp and GeoVax Labs 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..