Correlation Between LifeMD Preferred and Cadiz Depositary

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

By analyzing existing cross correlation between LifeMD Preferred Series and Cadiz Depositary Shares, you can compare the effects of market volatilities on LifeMD Preferred and Cadiz Depositary 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 LifeMD Preferred with a short position of Cadiz Depositary. Check out your portfolio center. Please also check ongoing floating volatility patterns of LifeMD Preferred and Cadiz Depositary.

Diversification Opportunities for LifeMD Preferred and Cadiz Depositary

0.57

Correlation Coefficient

LifeMD Preferred  Cadiz Depositary

Very weak diversification

The 3 months correlation between LifeMD and Cadiz is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding LifeMD Preferred Series and Cadiz Depositary Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadiz Depositary Shares and LifeMD Preferred 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 LifeMD Preferred Series are associated (or correlated) with Cadiz Depositary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadiz Depositary Shares has no effect on the direction of LifeMD Preferred i.e., LifeMD Preferred and Cadiz Depositary go up and down completely randomly.

Pair Corralation between LifeMD Preferred and Cadiz Depositary

Assuming the 90 days horizon LifeMD Preferred is expected to generate 6.02 times less return on investment than Cadiz Depositary. In addition to that, LifeMD Preferred is 1.3 times more volatile than Cadiz Depositary Shares. It trades about 0.02 of its total potential returns per unit of risk. Cadiz Depositary Shares is currently generating about 0.18 per unit of volatility. If you would invest  1,629  in Cadiz Depositary Shares on November 29, 2024 and sell it today you would earn a total of  174.00  from holding Cadiz Depositary Shares or generate 10.68% return on investment over 90 days.

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

LifeMD Preferred Series  vs.  Cadiz Depositary Shares

LifeMD Preferred Series

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LifeMD Preferred Series are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, LifeMD Preferred is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Cadiz Depositary Shares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cadiz Depositary Shares are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Cadiz Depositary may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with LifeMD Preferred and Cadiz Depositary

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

The idea behind LifeMD Preferred Series and Cadiz Depositary Shares 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.