Correlation Between Crocs and Levi Strauss
Can any of the company-specific risk be diversified away by investing in both Crocs and Levi Strauss 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 Crocs and Levi Strauss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crocs Inc and Levi Strauss Co, you can compare the effects of market volatilities on Crocs and Levi Strauss 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 Crocs with a short position of Levi Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crocs and Levi Strauss.
Diversification Opportunities for Crocs and Levi Strauss
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crocs and Levi is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Crocs Inc and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss and Crocs 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 Crocs Inc are associated (or correlated) with Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of Crocs i.e., Crocs and Levi Strauss go up and down completely randomly.
Pair Corralation between Crocs and Levi Strauss
Given the investment horizon of 90 days Crocs Inc is expected to under-perform the Levi Strauss. In addition to that, Crocs is 2.26 times more volatile than Levi Strauss Co. It trades about -0.02 of its total potential returns per unit of risk. Levi Strauss Co is currently generating about 0.07 per unit of volatility. If you would invest 1,721 in Levi Strauss Co on November 30, 2024 and sell it today you would earn a total of 77.50 from holding Levi Strauss Co or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crocs Inc vs. Levi Strauss Co
Performance |
| Timeline |
| Crocs Inc |
| Levi Strauss |
Crocs and Levi Strauss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crocs and Levi Strauss
The main advantage of trading using opposite Crocs and Levi Strauss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crocs position performs unexpectedly, Levi Strauss 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 Levi Strauss will offset losses from the drop in Levi Strauss' long position.The idea behind Crocs Inc and Levi Strauss Co 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.| Levi Strauss vs. LYFT Inc | Levi Strauss vs. Tapestry | Levi Strauss vs. Capri Holdings | Levi Strauss vs. YETI Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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