Correlation Between McCormick Company and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both McCormick Company and Lifeway Foods 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 McCormick Company and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McCormick Company Incorporated and Lifeway Foods, you can compare the effects of market volatilities on McCormick Company and Lifeway Foods 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 McCormick Company with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and Lifeway Foods.
Diversification Opportunities for McCormick Company and Lifeway Foods
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McCormick and Lifeway is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and McCormick Company 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 McCormick Company Incorporated are associated (or correlated) with Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of McCormick Company i.e., McCormick Company and Lifeway Foods go up and down completely randomly.
Pair Corralation between McCormick Company and Lifeway Foods
Assuming the 90 days horizon McCormick Company Incorporated is expected to generate 0.58 times more return on investment than Lifeway Foods. However, McCormick Company Incorporated is 1.72 times less risky than Lifeway Foods. It trades about 0.08 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.04 per unit of risk. If you would invest 7,552 in McCormick Company Incorporated on December 30, 2024 and sell it today you would earn a total of 575.00 from holding McCormick Company Incorporated or generate 7.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
McCormick Company Incorporated vs. Lifeway Foods
Performance |
Timeline |
McCormick Company |
Lifeway Foods |
McCormick Company and Lifeway Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McCormick Company and Lifeway Foods
The main advantage of trading using opposite McCormick Company and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McCormick Company position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.McCormick Company vs. Central Garden Pet | McCormick Company vs. Seneca Foods Corp | McCormick Company vs. Natures Sunshine Products | McCormick Company vs. Seneca Foods Corp |
Lifeway Foods vs. Seneca Foods Corp | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Lifevantage |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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