Correlation Between Revelation Biosciences and Lexaria Bioscience

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

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

Diversification Opportunities for Revelation Biosciences and Lexaria Bioscience

0.34

Correlation Coefficient

Revelation Biosciences  Lexaria Bioscience

Weak diversification

The 3 months correlation between Revelation and Lexaria is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Revelation Biosciences and Lexaria Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexaria Bioscience Corp and Revelation Biosciences 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 Revelation Biosciences are associated (or correlated) with Lexaria Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexaria Bioscience Corp has no effect on the direction of Revelation Biosciences i.e., Revelation Biosciences and Lexaria Bioscience go up and down completely randomly.

Pair Corralation between Revelation Biosciences and Lexaria Bioscience

Given the investment horizon of 90 days Revelation Biosciences is expected to generate 1.61 times more return on investment than Lexaria Bioscience. However, Revelation Biosciences is 1.61 times more volatile than Lexaria Bioscience Corp. It trades about -0.1 of its potential returns per unit of risk. Lexaria Bioscience Corp is currently generating about -0.27 per unit of risk. If you would invest  115.00  in Revelation Biosciences on August 30, 2024 and sell it today you would lose (39.50) from holding Revelation Biosciences or give up 34.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Revelation Biosciences  vs.  Lexaria Bioscience Corp

Revelation Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revelation Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Lexaria Bioscience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lexaria Bioscience Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Revelation Biosciences and Lexaria Bioscience

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

The idea behind Revelation Biosciences and Lexaria Bioscience 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.