Correlation Between Davis Commodities and Leafly Holdings
Can any of the company-specific risk be diversified away by investing in both Davis Commodities and Leafly Holdings 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 Davis Commodities and Leafly Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Commodities Limited and Leafly Holdings, you can compare the effects of market volatilities on Davis Commodities and Leafly Holdings 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 Davis Commodities with a short position of Leafly Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Commodities and Leafly Holdings.
Diversification Opportunities for Davis Commodities and Leafly Holdings
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Davis and Leafly is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Davis Commodities Limited and Leafly Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leafly Holdings and Davis Commodities 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 Davis Commodities Limited are associated (or correlated) with Leafly Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leafly Holdings has no effect on the direction of Davis Commodities i.e., Davis Commodities and Leafly Holdings go up and down completely randomly.
Pair Corralation between Davis Commodities and Leafly Holdings
Given the investment horizon of 90 days Davis Commodities Limited is expected to generate 0.26 times more return on investment than Leafly Holdings. However, Davis Commodities Limited is 3.87 times less risky than Leafly Holdings. It trades about -0.34 of its potential returns per unit of risk. Leafly Holdings is currently generating about -0.11 per unit of risk. If you would invest 109.00 in Davis Commodities Limited on August 28, 2024 and sell it today you would lose (21.00) from holding Davis Commodities Limited or give up 19.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Davis Commodities Limited vs. Leafly Holdings
Performance |
| Timeline |
| Davis Commodities |
| Leafly Holdings |
Davis Commodities and Leafly Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Commodities and Leafly Holdings
The main advantage of trading using opposite Davis Commodities and Leafly Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Commodities position performs unexpectedly, Leafly Holdings 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 Leafly Holdings will offset losses from the drop in Leafly Holdings' long position.| Davis Commodities vs. Innovative Food Hldg | Davis Commodities vs. Calavo Growers | Davis Commodities vs. The Chefs Warehouse | Davis Commodities vs. AMCON Distributing |
| Leafly Holdings vs. Leafly Holdings | Leafly Holdings vs. WM Technology | Leafly Holdings vs. Revelation Biosciences | Leafly Holdings vs. AEye Inc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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