Correlation Between Lifeway Foods and Macerich

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

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

Diversification Opportunities for Lifeway Foods and Macerich

-0.45

Correlation Coefficient

Lifeway Foods  Macerich

Very good diversification

The 3 months correlation between Lifeway and Macerich is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and The Macerich in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macerich 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 Macerich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macerich has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Macerich go up and down completely randomly.

Pair Corralation between Lifeway Foods and Macerich

Assuming the 90 days horizon Lifeway Foods is expected to under-perform the Macerich. In addition to that, Lifeway Foods is 1.71 times more volatile than The Macerich. It trades about -0.03 of its total potential returns per unit of risk. The Macerich is currently generating about 0.12 per unit of volatility. If you would invest  1,646  in The Macerich on October 24, 2024 and sell it today you would earn a total of  243.00  from holding The Macerich or generate 14.76% return on investment over 90 days.

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

Lifeway Foods  vs.  The Macerich

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.

Macerich

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Lifeway Foods and Macerich

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

The idea behind Lifeway Foods and The Macerich 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.