Correlation Between Lifeloc Technologies and Itron

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

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

Diversification Opportunities for Lifeloc Technologies and Itron

-0.72

Correlation Coefficient

Lifeloc Technologies  Itron

Pay attention - limited upside

The 3 months correlation between Lifeloc and Itron is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lifeloc Technologies and Itron Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itron Inc and Lifeloc Technologies 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 Lifeloc Technologies are associated (or correlated) with Itron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itron Inc has no effect on the direction of Lifeloc Technologies i.e., Lifeloc Technologies and Itron go up and down completely randomly.

Pair Corralation between Lifeloc Technologies and Itron

Given the investment horizon of 90 days Lifeloc Technologies is expected to under-perform the Itron. In addition to that, Lifeloc Technologies is 1.8 times more volatile than Itron Inc. It trades about -0.1 of its total potential returns per unit of risk. Itron Inc is currently generating about 0.1 per unit of volatility. If you would invest  10,254  in Itron Inc on September 13, 2024 and sell it today you would earn a total of  1,175  from holding Itron Inc or generate 11.46% return on investment over 90 days.

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

Lifeloc Technologies  vs.  Itron Inc

Lifeloc Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeloc Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Itron Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Itron Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Itron may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lifeloc Technologies and Itron

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

The idea behind Lifeloc Technologies and Itron Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.