Correlation Between Lifevantage and Vestiage

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

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

Diversification Opportunities for Lifevantage and Vestiage

0.69

Correlation Coefficient

Lifevantage  Vestiage

Poor diversification

The 3 months correlation between Lifevantage and Vestiage is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Vestiage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestiage 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 Vestiage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestiage has no effect on the direction of Lifevantage i.e., Lifevantage and Vestiage go up and down completely randomly.

Pair Corralation between Lifevantage and Vestiage

Given the investment horizon of 90 days Lifevantage is expected to under-perform the Vestiage. But the stock apears to be less risky and, when comparing its historical volatility, Lifevantage is 15.98 times less risky than Vestiage. The stock trades about -0.02 of its potential returns per unit of risk. The Vestiage is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9.90  in Vestiage on December 24, 2024 and sell it today you would lose (7.80) from holding Vestiage or give up 78.79% of portfolio value over 90 days.

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

Lifevantage  vs.  Vestiage

Lifevantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifevantage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Lifevantage is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Vestiage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vestiage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Vestiage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifevantage and Vestiage

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

The idea behind Lifevantage and Vestiage 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.