Correlation Between Lifeway Foods and Fortive

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

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

Diversification Opportunities for Lifeway Foods and Fortive

0.36

Correlation Coefficient

Lifeway Foods  Fortive

Weak diversification

The 3 months correlation between Lifeway and Fortive is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive 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 Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Fortive go up and down completely randomly.

Pair Corralation between Lifeway Foods and Fortive

Assuming the 90 days horizon Lifeway Foods is expected to generate 3.65 times more return on investment than Fortive. However, Lifeway Foods is 3.65 times more volatile than Fortive. It trades about 0.08 of its potential returns per unit of risk. Fortive is currently generating about 0.04 per unit of risk. If you would invest  555.00  in Lifeway Foods on September 14, 2024 and sell it today you would earn a total of  1,705  from holding Lifeway Foods or generate 307.21% return on investment over 90 days.

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

Lifeway Foods  vs.  Fortive

Lifeway Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lifeway Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lifeway Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Fortive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lifeway Foods and Fortive

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

The idea behind Lifeway Foods and Fortive 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.

Check out your portfolio center.

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.