Correlation Between Leidos Holdings and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Leidos Holdings and Spotify Technology 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 Leidos Holdings and Spotify Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leidos Holdings and Spotify Technology SA, you can compare the effects of market volatilities on Leidos Holdings and Spotify Technology 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 Leidos Holdings with a short position of Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leidos Holdings and Spotify Technology.
Diversification Opportunities for Leidos Holdings and Spotify Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leidos and Spotify is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Leidos Holdings and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology and Leidos Holdings 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 Leidos Holdings are associated (or correlated) with Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Leidos Holdings i.e., Leidos Holdings and Spotify Technology go up and down completely randomly.
Pair Corralation between Leidos Holdings and Spotify Technology
Assuming the 90 days trading horizon Leidos Holdings is expected to under-perform the Spotify Technology. In addition to that, Leidos Holdings is 1.23 times more volatile than Spotify Technology SA. It trades about -0.04 of its total potential returns per unit of risk. Spotify Technology SA is currently generating about 0.38 per unit of volatility. If you would invest 56,155 in Spotify Technology SA on September 1, 2024 and sell it today you would earn a total of 15,604 from holding Spotify Technology SA or generate 27.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Leidos Holdings vs. Spotify Technology SA
Performance |
| Timeline |
| Leidos Holdings |
| Spotify Technology |
Leidos Holdings and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leidos Holdings and Spotify Technology
The main advantage of trading using opposite Leidos Holdings and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leidos Holdings position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology's long position.| Leidos Holdings vs. Telecomunicaes Brasileiras SA | Leidos Holdings vs. Charter Communications | Leidos Holdings vs. Marfrig Global Foods | Leidos Holdings vs. Multilaser Industrial SA |
| Spotify Technology vs. New Oriental Education | Spotify Technology vs. Electronic Arts | Spotify Technology vs. Unifique Telecomunicaes SA | Spotify Technology vs. Multilaser Industrial SA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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