Correlation Between Natural Alternatives and Lifevantage

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

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

Diversification Opportunities for Natural Alternatives and Lifevantage

-0.47

Correlation Coefficient

Natural Alternatives  Lifevantage

Very good diversification

The 3 months correlation between Natural and Lifevantage is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage and Natural Alternatives 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 Natural Alternatives International are associated (or correlated) with Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Natural Alternatives i.e., Natural Alternatives and Lifevantage go up and down completely randomly.

Pair Corralation between Natural Alternatives and Lifevantage

Given the investment horizon of 90 days Natural Alternatives International is expected to generate 0.76 times more return on investment than Lifevantage. However, Natural Alternatives International is 1.32 times less risky than Lifevantage. It trades about 0.08 of its potential returns per unit of risk. Lifevantage is currently generating about -0.05 per unit of risk. If you would invest  606.00  in Natural Alternatives International on January 30, 2024 and sell it today you would earn a total of  28.00  from holding Natural Alternatives International or generate 4.62% return on investment over 90 days.

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

Natural Alternatives Internati  vs.  Lifevantage

Natural Alternatives

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Natural Alternatives International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Natural Alternatives is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Lifevantage

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Natural Alternatives and Lifevantage

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

The idea behind Natural Alternatives International and Lifevantage 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.