Correlation Between Lifevantage and Eureka Acquisition

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

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

Diversification Opportunities for Lifevantage and Eureka Acquisition

0.9

Correlation Coefficient

Lifevantage  Eureka Acquisition

Almost no diversification

The 3 months correlation between Lifevantage and Eureka is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Eureka Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Acquisition Corp and Lifevantage 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 Lifevantage are associated (or correlated) with Eureka Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Acquisition Corp has no effect on the direction of Lifevantage i.e., Lifevantage and Eureka Acquisition go up and down completely randomly.

Pair Corralation between Lifevantage and Eureka Acquisition

Given the investment horizon of 90 days Lifevantage is expected to generate 59.24 times more return on investment than Eureka Acquisition. However, Lifevantage is 59.24 times more volatile than Eureka Acquisition Corp. It trades about 0.18 of its potential returns per unit of risk. Eureka Acquisition Corp is currently generating about 0.21 per unit of risk. If you would invest  1,189  in Lifevantage on October 8, 2024 and sell it today you would earn a total of  590.00  from holding Lifevantage or generate 49.62% return on investment over 90 days.

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

Lifevantage  vs.  Eureka Acquisition Corp

Lifevantage

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Eureka Acquisition Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Acquisition Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eureka Acquisition is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Lifevantage and Eureka Acquisition

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

The idea behind Lifevantage and Eureka Acquisition Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.