Correlation Between Livewire Ergogenics and Elixinol Global

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

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

Diversification Opportunities for Livewire Ergogenics and Elixinol Global

0.49

Correlation Coefficient

Livewire Ergogenics  Elixinol Global

Very weak diversification

The 3 months correlation between Livewire and Elixinol is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Livewire Ergogenics and Elixinol Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elixinol Global and Livewire Ergogenics 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 Livewire Ergogenics are associated (or correlated) with Elixinol Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elixinol Global has no effect on the direction of Livewire Ergogenics i.e., Livewire Ergogenics and Elixinol Global go up and down completely randomly.

Pair Corralation between Livewire Ergogenics and Elixinol Global

Given the investment horizon of 90 days Livewire Ergogenics is expected to generate 5.26 times less return on investment than Elixinol Global. But when comparing it to its historical volatility, Livewire Ergogenics is 2.38 times less risky than Elixinol Global. It trades about 0.05 of its potential returns per unit of risk. Elixinol Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.88  in Elixinol Global on December 30, 2024 and sell it today you would lose (0.68) from holding Elixinol Global or give up 36.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Livewire Ergogenics  vs.  Elixinol Global

Livewire Ergogenics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Livewire Ergogenics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Livewire Ergogenics showed solid returns over the last few months and may actually be approaching a breakup point.

Elixinol Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elixinol Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Elixinol Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Livewire Ergogenics and Elixinol Global

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

The idea behind Livewire Ergogenics and Elixinol Global 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.