Correlation Between American Outdoor and Leatt Corp
Can any of the company-specific risk be diversified away by investing in both American Outdoor and Leatt Corp 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 American Outdoor and Leatt Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Outdoor Brands and Leatt Corp, you can compare the effects of market volatilities on American Outdoor and Leatt Corp 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 American Outdoor with a short position of Leatt Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Outdoor and Leatt Corp.
Diversification Opportunities for American Outdoor and Leatt Corp
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Leatt is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Outdoor Brands and Leatt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatt Corp and American Outdoor 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 American Outdoor Brands are associated (or correlated) with Leatt Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatt Corp has no effect on the direction of American Outdoor i.e., American Outdoor and Leatt Corp go up and down completely randomly.
Pair Corralation between American Outdoor and Leatt Corp
Given the investment horizon of 90 days American Outdoor Brands is expected to generate 0.58 times more return on investment than Leatt Corp. However, American Outdoor Brands is 1.72 times less risky than Leatt Corp. It trades about 0.06 of its potential returns per unit of risk. Leatt Corp is currently generating about -0.03 per unit of risk. If you would invest 930.00 in American Outdoor Brands on August 28, 2024 and sell it today you would earn a total of 27.00 from holding American Outdoor Brands or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Outdoor Brands vs. Leatt Corp
Performance |
| Timeline |
| American Outdoor Brands |
| Leatt Corp |
American Outdoor and Leatt Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Outdoor and Leatt Corp
The main advantage of trading using opposite American Outdoor and Leatt Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Outdoor position performs unexpectedly, Leatt Corp 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 Leatt Corp will offset losses from the drop in Leatt Corp's long position.| American Outdoor vs. Clarus Corp | American Outdoor vs. Escalade Incorporated | American Outdoor vs. Johnson Outdoors | American Outdoor vs. JAKKS Pacific |
| Leatt Corp vs. Escalade Incorporated | Leatt Corp vs. American Outdoor Brands | Leatt Corp vs. OneSpaWorld Holdings | Leatt Corp vs. JAKKS Pacific |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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