Correlation Between Lobe Sciences and Wildflower Brands

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

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

Diversification Opportunities for Lobe Sciences and Wildflower Brands

0.0

Correlation Coefficient

Lobe Sciences  Wildflower Brands

Pay attention - limited upside

The 3 months correlation between Lobe and Wildflower is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lobe Sciences and Wildflower Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wildflower Brands and Lobe Sciences 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 Lobe Sciences are associated (or correlated) with Wildflower Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wildflower Brands has no effect on the direction of Lobe Sciences i.e., Lobe Sciences and Wildflower Brands go up and down completely randomly.

Pair Corralation between Lobe Sciences and Wildflower Brands

If you would invest  0.15  in Lobe Sciences on September 19, 2024 and sell it today you would lose (0.03) from holding Lobe Sciences or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lobe Sciences  vs.  Wildflower Brands

Lobe Sciences

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lobe Sciences are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Lobe Sciences reported solid returns over the last few months and may actually be approaching a breakup point.

Wildflower Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wildflower Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Wildflower Brands is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lobe Sciences and Wildflower Brands

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

The idea behind Lobe Sciences and Wildflower Brands 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.