Correlation Between Emerson Radio and Lifevantage

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

By analyzing existing cross correlation between Emerson Radio and Lifevantage, you can compare the effects of market volatilities on Emerson Radio and Lifevantage 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 Emerson Radio with a short position of Lifevantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and Lifevantage.

Diversification Opportunities for Emerson Radio and Lifevantage

-0.77

Correlation Coefficient

Emerson Radio  Lifevantage

Pay attention - limited upside

The 3 months correlation between Emerson and Lifevantage is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage and Emerson Radio 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 Emerson Radio are associated (or correlated) with Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Emerson Radio i.e., Emerson Radio and Lifevantage go up and down completely randomly.

Pair Corralation between Emerson Radio and Lifevantage

Considering the 90-day investment horizon Emerson Radio is expected to generate 88.27 times less return on investment than Lifevantage. But when comparing it to its historical volatility, Emerson Radio is 3.4 times less risky than Lifevantage. It trades about 0.01 of its potential returns per unit of risk. Lifevantage is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,500  in Lifevantage on October 6, 2024 and sell it today you would earn a total of  279.00  from holding Lifevantage or generate 18.6% return on investment over 90 days.

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

Emerson Radio  vs.  Lifevantage

Emerson Radio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lifevantage

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emerson Radio and Lifevantage

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

The idea behind Emerson Radio and Lifevantage 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.