Correlation Between Lexaria Bioscience and Nutriband

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

Diversification Opportunities for Lexaria Bioscience and Nutriband

-0.03

Correlation Coefficient

Lexaria Bioscience  Nutriband

Good diversification

The 3 months correlation between Lexaria and Nutriband is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lexaria Bioscience Corp and Nutriband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutriband 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 Nutriband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutriband has no effect on the direction of Lexaria Bioscience i.e., Lexaria Bioscience and Nutriband go up and down completely randomly.

Pair Corralation between Lexaria Bioscience and Nutriband

Given the investment horizon of 90 days Lexaria Bioscience Corp is expected to generate 0.78 times more return on investment than Nutriband. However, Lexaria Bioscience Corp is 1.29 times less risky than Nutriband. It trades about -0.14 of its potential returns per unit of risk. Nutriband is currently generating about -0.22 per unit of risk. If you would invest  228.00  in Lexaria Bioscience Corp on September 3, 2024 and sell it today you would lose (20.00) from holding Lexaria Bioscience Corp or give up 8.77% of portfolio value over 90 days.

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

Lexaria Bioscience Corp  vs.  Nutriband

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.

Nutriband

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nutriband are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nutriband sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lexaria Bioscience and Nutriband

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

The idea behind Lexaria Bioscience Corp and Nutriband 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.