Correlation Between Lifecore Biomedical and INC Research

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

By analyzing existing cross correlation between Lifecore Biomedical and INC Research Holdings, you can compare the effects of market volatilities on Lifecore Biomedical and INC Research 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 Lifecore Biomedical with a short position of INC Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifecore Biomedical and INC Research.

Diversification Opportunities for Lifecore Biomedical and INC Research

-0.49

Correlation Coefficient

Lifecore Biomedical  INC Research

Very good diversification

The 3 months correlation between Lifecore and INC is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and INC Research Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC Research Holdings and Lifecore Biomedical 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 Lifecore Biomedical are associated (or correlated) with INC Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC Research Holdings has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and INC Research go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and INC Research

Given the investment horizon of 90 days Lifecore Biomedical is expected to under-perform the INC Research. In addition to that, Lifecore Biomedical is 1.11 times more volatile than INC Research Holdings. It trades about 0.0 of its total potential returns per unit of risk. INC Research Holdings is currently generating about 0.08 per unit of volatility. If you would invest  134.00  in INC Research Holdings on December 19, 2024 and sell it today you would earn a total of  20.00  from holding INC Research Holdings or generate 14.93% return on investment over 90 days.

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

Lifecore Biomedical  vs.  INC Research Holdings

Lifecore Biomedical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifecore Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Lifecore Biomedical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

INC Research Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INC Research Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, INC Research reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifecore Biomedical and INC Research

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

The idea behind Lifecore Biomedical and INC Research Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.