Correlation Between Nutriband and Lexaria Bioscience

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

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

Diversification Opportunities for Nutriband and Lexaria Bioscience

-0.47

Correlation Coefficient

Nutriband  Lexaria Bioscience

Very good diversification

The 3 months correlation between Nutriband and Lexaria is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nutriband and Lexaria Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexaria Bioscience Corp and Nutriband 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 Nutriband are associated (or correlated) with Lexaria Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexaria Bioscience Corp has no effect on the direction of Nutriband i.e., Nutriband and Lexaria Bioscience go up and down completely randomly.

Pair Corralation between Nutriband and Lexaria Bioscience

Given the investment horizon of 90 days Nutriband is expected to generate 1.77 times more return on investment than Lexaria Bioscience. However, Nutriband is 1.77 times more volatile than Lexaria Bioscience Corp. It trades about 0.11 of its potential returns per unit of risk. Lexaria Bioscience Corp is currently generating about -0.05 per unit of risk. If you would invest  418.00  in Nutriband on December 30, 2024 and sell it today you would earn a total of  208.00  from holding Nutriband or generate 49.76% return on investment over 90 days.

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

Nutriband  vs.  Lexaria Bioscience Corp

Nutriband

Risk-Adjusted Performance

OK

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

Lexaria Bioscience Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lexaria Bioscience Corp 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 fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nutriband and Lexaria Bioscience

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

The idea behind Nutriband and Lexaria Bioscience Corp 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.