Correlation Between Lifestyle and Buffalo International

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Can any of the company-specific risk be diversified away by investing in both Lifestyle and Buffalo International 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 Lifestyle and Buffalo International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Aggressive and Buffalo International Fund, you can compare the effects of market volatilities on Lifestyle and Buffalo International 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 Lifestyle with a short position of Buffalo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Buffalo International.

Diversification Opportunities for Lifestyle and Buffalo International

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Lifestyle and Buffalo is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding LIFESTYLE II AGGRESSIVE and BUFFALO INTERNATIONAL FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo International and Lifestyle 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 Lifestyle Ii Aggressive are associated (or correlated) with Buffalo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo International has no effect on the direction of Lifestyle i.e., Lifestyle and Buffalo International go up and down completely randomly.

Pair Corralation between Lifestyle and Buffalo International

Assuming the 90 days horizon Lifestyle is expected to generate 1.05 times less return on investment than Buffalo International. But when comparing it to its historical volatility, Lifestyle Ii Aggressive is 1.06 times less risky than Buffalo International. It trades about 0.22 of its potential returns per unit of risk. Buffalo International Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,103  in Buffalo International Fund on December 29, 2023 and sell it today you would earn a total of  134.00  from holding Buffalo International Fund or generate 6.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

LIFESTYLE II AGGRESSIVE  vs.  BUFFALO INTERNATIONAL FUND

 Performance 
       Timeline  
Lifestyle Ii Aggressive 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lifestyle Ii Aggressive are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lifestyle may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Buffalo International 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Buffalo International Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Buffalo International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lifestyle and Buffalo International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lifestyle and Buffalo International

The main advantage of trading using opposite Lifestyle and Buffalo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, Buffalo International 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 Buffalo International will offset losses from the drop in Buffalo International's long position.
The idea behind Lifestyle Ii Aggressive and Buffalo International Fund 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.
Check out your portfolio center.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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