Correlation Between Lifevantage and IB Acquisition

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

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

Diversification Opportunities for Lifevantage and IB Acquisition

0.85

Correlation Coefficient

Lifevantage  IB Acquisition

Very poor diversification

The 3 months correlation between Lifevantage and IBAC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and IB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IB 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 IB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IB Acquisition Corp has no effect on the direction of Lifevantage i.e., Lifevantage and IB Acquisition go up and down completely randomly.

Pair Corralation between Lifevantage and IB Acquisition

Given the investment horizon of 90 days Lifevantage is expected to generate 28.53 times more return on investment than IB Acquisition. However, Lifevantage is 28.53 times more volatile than IB Acquisition Corp. It trades about 0.25 of its potential returns per unit of risk. IB Acquisition Corp is currently generating about 0.25 per unit of risk. If you would invest  1,364  in Lifevantage on September 17, 2024 and sell it today you would earn a total of  240.00  from holding Lifevantage or generate 17.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Lifevantage  vs.  IB Acquisition Corp

Lifevantage

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

IB Acquisition Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IB Acquisition Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IB Acquisition is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lifevantage and IB Acquisition

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

The idea behind Lifevantage and IB 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.