Correlation Between Lifeway Foods and USU Software
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and USU Software 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 USU Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and USU Software AG, you can compare the effects of market volatilities on Lifeway Foods and USU Software 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 USU Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and USU Software.
Diversification Opportunities for Lifeway Foods and USU Software
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lifeway and USU is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and USU Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USU Software AG 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 USU Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USU Software AG has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and USU Software go up and down completely randomly.
Pair Corralation between Lifeway Foods and USU Software
Assuming the 90 days horizon Lifeway Foods is expected to generate 2.66 times more return on investment than USU Software. However, Lifeway Foods is 2.66 times more volatile than USU Software AG. It trades about 0.06 of its potential returns per unit of risk. USU Software AG is currently generating about 0.05 per unit of risk. If you would invest 1,040 in Lifeway Foods on December 2, 2024 and sell it today you would earn a total of 960.00 from holding Lifeway Foods or generate 92.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.47% |
Values | Daily Returns |
Lifeway Foods vs. USU Software AG
Performance |
Timeline |
Lifeway Foods |
USU Software AG |
Lifeway Foods and USU Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lifeway Foods and USU Software
The main advantage of trading using opposite Lifeway Foods and USU Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, USU Software 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 USU Software will offset losses from the drop in USU Software's long position.Lifeway Foods vs. Nestl SA | Lifeway Foods vs. Kraft Heinz Co | Lifeway Foods vs. General Mills | Lifeway Foods vs. General Mills |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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