Correlation Between Lifecore Biomedical and Journey Medical

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

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

Diversification Opportunities for Lifecore Biomedical and Journey Medical

-0.53

Correlation Coefficient

Lifecore Biomedical  Journey Medical

Excellent diversification

The 3 months correlation between Lifecore and Journey is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Journey Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Medical Corp and Lifecore Biomedical 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 Lifecore Biomedical are associated (or correlated) with Journey Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Medical Corp has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Journey Medical go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Journey Medical

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 1.1 times more return on investment than Journey Medical. However, Lifecore Biomedical is 1.1 times more volatile than Journey Medical Corp. It trades about -0.06 of its potential returns per unit of risk. Journey Medical Corp is currently generating about -0.16 per unit of risk. If you would invest  748.00  in Lifecore Biomedical on September 21, 2024 and sell it today you would lose (41.00) from holding Lifecore Biomedical or give up 5.48% of portfolio value over 90 days.

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

Lifecore Biomedical  vs.  Journey Medical Corp

Lifecore Biomedical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 12 (%) 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.

Journey Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Journey Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Journey Medical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lifecore Biomedical and Journey Medical

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

The idea behind Lifecore Biomedical and Journey Medical 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .