Correlation Between LIFEWAY FOODS and KeyCorp

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

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

Diversification Opportunities for LIFEWAY FOODS and KeyCorp

-0.39

Correlation Coefficient

LIFEWAY FOODS  KeyCorp

Very good diversification

The 3 months correlation between LIFEWAY and KeyCorp is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and KeyCorp go up and down completely randomly.

Pair Corralation between LIFEWAY FOODS and KeyCorp

Assuming the 90 days trading horizon LIFEWAY FOODS is expected to under-perform the KeyCorp. In addition to that, LIFEWAY FOODS is 1.58 times more volatile than KeyCorp. It trades about -0.06 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.04 per unit of volatility. If you would invest  1,764  in KeyCorp on October 21, 2024 and sell it today you would lose (45.00) from holding KeyCorp or give up 2.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LIFEWAY FOODS  vs.  KeyCorp

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. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

KeyCorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KeyCorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with LIFEWAY FOODS and KeyCorp

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

The idea behind LIFEWAY FOODS and KeyCorp 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 Transaction History module to view history of all your transactions and understand their impact on performance.