Correlation Between Lifecore Biomedical and Silver Spike

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

By analyzing existing cross correlation between Lifecore Biomedical and Silver Spike Investment, you can compare the effects of market volatilities on Lifecore Biomedical and Silver Spike 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 Silver Spike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifecore Biomedical and Silver Spike.

Diversification Opportunities for Lifecore Biomedical and Silver Spike

0.73

Correlation Coefficient

Lifecore Biomedical  Silver Spike

Poor diversification

The 3 months correlation between Lifecore and Silver is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Silver Spike Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spike Investment 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 Silver Spike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spike Investment has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Silver Spike go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Silver Spike

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 2.71 times more return on investment than Silver Spike. However, Lifecore Biomedical is 2.71 times more volatile than Silver Spike Investment. It trades about 0.17 of its potential returns per unit of risk. Silver Spike Investment is currently generating about 0.16 per unit of risk. If you would invest  518.00  in Lifecore Biomedical on September 13, 2024 and sell it today you would earn a total of  258.00  from holding Lifecore Biomedical or generate 49.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.89%
Values	Daily Returns

Lifecore Biomedical  vs.  Silver Spike Investment

Lifecore Biomedical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 13 (%) 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.

Silver Spike Investment

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifecore Biomedical and Silver Spike

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

The idea behind Lifecore Biomedical and Silver Spike Investment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.