Correlation Between Lifevantage and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Lifevantage and NYSE Composite 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 Lifevantage and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifevantage and NYSE Composite, you can compare the effects of market volatilities on Lifevantage and NYSE Composite 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 Lifevantage with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifevantage and NYSE Composite.
Diversification Opportunities for Lifevantage and NYSE Composite
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lifevantage and NYSE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Lifevantage 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 Lifevantage are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Lifevantage i.e., Lifevantage and NYSE Composite go up and down completely randomly.
Pair Corralation between Lifevantage and NYSE Composite
Given the investment horizon of 90 days Lifevantage is expected to generate 5.75 times more return on investment than NYSE Composite. However, Lifevantage is 5.75 times more volatile than NYSE Composite. It trades about 0.33 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.13 per unit of risk. If you would invest 601.00 in Lifevantage on February 27, 2024 and sell it today you would earn a total of 152.00 from holding Lifevantage or generate 25.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lifevantage vs. NYSE Composite
Performance |
Timeline |
Lifevantage and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Lifevantage
Pair trading matchups for Lifevantage
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Lifevantage and NYSE Composite
The main advantage of trading using opposite Lifevantage and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifevantage position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Lifevantage vs. Lifeway Foods | Lifevantage vs. Central Garden Pet | Lifevantage vs. Seneca Foods Corp | Lifevantage vs. Central Garden Pet |
NYSE Composite vs. Cementos Pacasmayo SAA | NYSE Composite vs. Western Union Co | NYSE Composite vs. Primoris Services | NYSE Composite vs. Siriuspoint |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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