Correlation Between Dominari Holdings and Lifecore Biomedical

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

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

Diversification Opportunities for Dominari Holdings and Lifecore Biomedical

-0.65

Correlation Coefficient

Dominari Holdings  Lifecore Biomedical

Excellent diversification

The 3 months correlation between Dominari and Lifecore is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dominari Holdings and Lifecore Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecore Biomedical and Dominari Holdings 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 Dominari Holdings are associated (or correlated) with Lifecore Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifecore Biomedical has no effect on the direction of Dominari Holdings i.e., Dominari Holdings and Lifecore Biomedical go up and down completely randomly.

Pair Corralation between Dominari Holdings and Lifecore Biomedical

Given the investment horizon of 90 days Dominari Holdings is expected to generate 32.09 times less return on investment than Lifecore Biomedical. But when comparing it to its historical volatility, Dominari Holdings is 1.11 times less risky than Lifecore Biomedical. It trades about 0.01 of its potential returns per unit of risk. Lifecore Biomedical is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  458.00  in Lifecore Biomedical on September 5, 2024 and sell it today you would earn a total of  289.00  from holding Lifecore Biomedical or generate 63.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dominari Holdings  vs.  Lifecore Biomedical

Dominari Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dominari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Dominari Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Lifecore Biomedical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Lifecore Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dominari Holdings and Lifecore Biomedical

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

The idea behind Dominari Holdings and Lifecore Biomedical 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 Stocks Directory module to find actively traded stocks across global markets.