Correlation Between Lifeway Foods and Amdocs

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

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

Diversification Opportunities for Lifeway Foods and Amdocs

-0.12

Correlation Coefficient

Lifeway Foods  Amdocs

Good diversification

The 3 months correlation between Lifeway and Amdocs is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Amdocs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs Limited and Lifeway Foods 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 Lifeway Foods are associated (or correlated) with Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs Limited has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Amdocs go up and down completely randomly.

Pair Corralation between Lifeway Foods and Amdocs

Assuming the 90 days horizon Lifeway Foods is expected to under-perform the Amdocs. In addition to that, Lifeway Foods is 2.98 times more volatile than Amdocs Limited. It trades about -0.03 of its total potential returns per unit of risk. Amdocs Limited is currently generating about -0.01 per unit of volatility. If you would invest  8,178  in Amdocs Limited on October 24, 2024 and sell it today you would lose (94.00) from holding Amdocs Limited or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Lifeway Foods  vs.  Amdocs Limited

Lifeway Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeway Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Amdocs Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amdocs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amdocs is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lifeway Foods and Amdocs

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

The idea behind Lifeway Foods and Amdocs Limited 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.