Correlation Between Lifevantage and 693304AS6

Can any of the company-specific risk be diversified away by investing in both Lifevantage and 693304AS6 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 Lifevantage and 693304AS6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lifevantage and PECO ENERGY 415, you can compare the effects of market volatilities on Lifevantage and 693304AS6 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 Lifevantage with a short position of 693304AS6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifevantage and 693304AS6.

Diversification Opportunities for Lifevantage and 693304AS6

0.39

Correlation Coefficient

Lifevantage  693304AS6

Weak diversification

The 3 months correlation between Lifevantage and 693304AS6 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and PECO ENERGY 415 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PECO ENERGY 415 and Lifevantage 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 Lifevantage are associated (or correlated) with 693304AS6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PECO ENERGY 415 has no effect on the direction of Lifevantage i.e., Lifevantage and 693304AS6 go up and down completely randomly.

Pair Corralation between Lifevantage and 693304AS6

Given the investment horizon of 90 days Lifevantage is expected to generate 1.52 times more return on investment than 693304AS6. However, Lifevantage is 1.52 times more volatile than PECO ENERGY 415. It trades about 0.17 of its potential returns per unit of risk. PECO ENERGY 415 is currently generating about -0.03 per unit of risk. If you would invest  1,047  in Lifevantage on September 13, 2024 and sell it today you would earn a total of  478.00  from holding Lifevantage or generate 45.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	46.03%
Values	Daily Returns

Lifevantage  vs.  PECO ENERGY 415

Lifevantage

Risk-Adjusted Performance

13 of 100

Good

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

PECO ENERGY 415

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PECO ENERGY 415 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 693304AS6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lifevantage and 693304AS6

The main advantage of trading using opposite Lifevantage and 693304AS6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifevantage position performs unexpectedly, 693304AS6 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 693304AS6 will offset losses from the drop in 693304AS6's long position.

The idea behind Lifevantage and PECO ENERGY 415 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.