Correlation Between Lifeist Wellness and Tilray

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

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

Diversification Opportunities for Lifeist Wellness and Tilray

0.79

Correlation Coefficient

Lifeist Wellness  Tilray

Poor diversification

The 3 months correlation between Lifeist and Tilray is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lifeist Wellness and Tilray Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilray Inc and Lifeist Wellness 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 Lifeist Wellness are associated (or correlated) with Tilray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilray Inc has no effect on the direction of Lifeist Wellness i.e., Lifeist Wellness and Tilray go up and down completely randomly.

Pair Corralation between Lifeist Wellness and Tilray

Assuming the 90 days trading horizon Lifeist Wellness is expected to under-perform the Tilray. In addition to that, Lifeist Wellness is 2.5 times more volatile than Tilray Inc. It trades about -0.1 of its total potential returns per unit of risk. Tilray Inc is currently generating about -0.19 per unit of volatility. If you would invest  248.00  in Tilray Inc on September 17, 2024 and sell it today you would lose (77.00) from holding Tilray Inc or give up 31.05% of portfolio value over 90 days.

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

Lifeist Wellness  vs.  Tilray Inc

Lifeist Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeist Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Tilray Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tilray Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Lifeist Wellness and Tilray

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

The idea behind Lifeist Wellness and Tilray Inc 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 Stocks Directory module to find actively traded stocks across global markets.