Correlation Between Lifevantage and Jacobs Solutions

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

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

Diversification Opportunities for Lifevantage and Jacobs Solutions

-0.47

Correlation Coefficient

Lifevantage  Jacobs Solutions

Very good diversification

The 3 months correlation between Lifevantage and Jacobs is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions 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 Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Lifevantage i.e., Lifevantage and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Lifevantage and Jacobs Solutions

Given the investment horizon of 90 days Lifevantage is expected to generate 3.7 times more return on investment than Jacobs Solutions. However, Lifevantage is 3.7 times more volatile than Jacobs Solutions. It trades about 0.24 of its potential returns per unit of risk. Jacobs Solutions is currently generating about 0.01 per unit of risk. If you would invest  1,249  in Lifevantage on October 23, 2024 and sell it today you would earn a total of  1,244  from holding Lifevantage or generate 99.6% return on investment over 90 days.

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

Lifevantage  vs.  Jacobs Solutions

Lifevantage

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 18 (%) 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.

Jacobs Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jacobs Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, Jacobs Solutions is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Lifevantage and Jacobs Solutions

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

The idea behind Lifevantage and Jacobs Solutions 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.