Correlation Between Lifevantage and Pacific Gas

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

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

Diversification Opportunities for Lifevantage and Pacific Gas

-0.04

Correlation Coefficient

Lifevantage  Pacific Gas

Good diversification

The 3 months correlation between Lifevantage and Pacific is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Pacific Gas Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Gas Electric 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 Pacific Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Gas Electric has no effect on the direction of Lifevantage i.e., Lifevantage and Pacific Gas go up and down completely randomly.

Pair Corralation between Lifevantage and Pacific Gas

Given the investment horizon of 90 days Lifevantage is expected to generate 1.46 times more return on investment than Pacific Gas. However, Lifevantage is 1.46 times more volatile than Pacific Gas Electric. It trades about 0.24 of its potential returns per unit of risk. Pacific Gas Electric is currently generating about -0.07 per unit of risk. If you would invest  1,181  in Lifevantage on October 16, 2024 and sell it today you would earn a total of  1,119  from holding Lifevantage or generate 94.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.67%
Values	Daily Returns

Lifevantage  vs.  Pacific Gas Electric

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.

Pacific Gas Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Gas Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Preferred Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lifevantage and Pacific Gas

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

The idea behind Lifevantage and Pacific Gas Electric 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.