Correlation Between Carbon Revolution and Lifevantage

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

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

Diversification Opportunities for Carbon Revolution and Lifevantage

-0.39

Correlation Coefficient

Carbon Revolution  Lifevantage

Very good diversification

The 3 months correlation between Carbon and Lifevantage is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Carbon Revolution Public and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage and Carbon Revolution 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 Carbon Revolution Public 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 Carbon Revolution i.e., Carbon Revolution and Lifevantage go up and down completely randomly.

Pair Corralation between Carbon Revolution and Lifevantage

Assuming the 90 days horizon Carbon Revolution is expected to generate 1.15 times less return on investment than Lifevantage. In addition to that, Carbon Revolution is 3.25 times more volatile than Lifevantage. It trades about 0.07 of its total potential returns per unit of risk. Lifevantage is currently generating about 0.26 per unit of volatility. If you would invest  1,379  in Lifevantage on September 24, 2024 and sell it today you would earn a total of  357.00  from holding Lifevantage or generate 25.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Carbon Revolution Public  vs.  Lifevantage

Carbon Revolution Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

Lifevantage

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 15 (%) 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 Carbon Revolution and Lifevantage

The main advantage of trading using opposite Carbon Revolution and Lifevantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carbon Revolution 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 Carbon Revolution Public 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.