Correlation Between Lifetime Brands and Patrick Industries

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

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

Diversification Opportunities for Lifetime Brands and Patrick Industries

0.77

Correlation Coefficient

Lifetime Brands  Patrick Industries

Poor diversification

The 3 months correlation between Lifetime and Patrick is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lifetime Brands and Patrick Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patrick Industries and Lifetime Brands 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 Lifetime Brands are associated (or correlated) with Patrick Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patrick Industries has no effect on the direction of Lifetime Brands i.e., Lifetime Brands and Patrick Industries go up and down completely randomly.

Pair Corralation between Lifetime Brands and Patrick Industries

Given the investment horizon of 90 days Lifetime Brands is expected to under-perform the Patrick Industries. In addition to that, Lifetime Brands is 1.35 times more volatile than Patrick Industries. It trades about -0.21 of its total potential returns per unit of risk. Patrick Industries is currently generating about -0.08 per unit of volatility. If you would invest  9,461  in Patrick Industries on February 6, 2025 and sell it today you would lose (1,285) from holding Patrick Industries or give up 13.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lifetime Brands  vs.  Patrick Industries

Lifetime Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifetime Brands 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 comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Patrick Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patrick Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lifetime Brands and Patrick Industries

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

The idea behind Lifetime Brands and Patrick Industries 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.