Correlation Between LIFEWAY FOODS and Trupanion

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

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

Diversification Opportunities for LIFEWAY FOODS and Trupanion

0.33

Correlation Coefficient

LIFEWAY FOODS  Trupanion

Weak diversification

The 3 months correlation between LIFEWAY and Trupanion is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Trupanion go up and down completely randomly.

Pair Corralation between LIFEWAY FOODS and Trupanion

Assuming the 90 days trading horizon LIFEWAY FOODS is expected to under-perform the Trupanion. But the stock apears to be less risky and, when comparing its historical volatility, LIFEWAY FOODS is 1.37 times less risky than Trupanion. The stock trades about -0.05 of its potential returns per unit of risk. The Trupanion is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,957  in Trupanion on September 18, 2024 and sell it today you would earn a total of  25.00  from holding Trupanion or generate 0.5% 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.  Trupanion

LIFEWAY FOODS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LIFEWAY FOODS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, LIFEWAY FOODS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Trupanion

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trupanion are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Trupanion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LIFEWAY FOODS and Trupanion

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

The idea behind LIFEWAY FOODS and Trupanion 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.