Correlation Between Lucid and Leef Brands
Can any of the company-specific risk be diversified away by investing in both Lucid and Leef Brands 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 Lucid and Leef Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Leef Brands, you can compare the effects of market volatilities on Lucid and Leef Brands 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 Lucid with a short position of Leef Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Leef Brands.
Diversification Opportunities for Lucid and Leef Brands
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lucid and Leef is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands and Lucid 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 Lucid Group are associated (or correlated) with Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of Lucid i.e., Lucid and Leef Brands go up and down completely randomly.
Pair Corralation between Lucid and Leef Brands
Given the investment horizon of 90 days Lucid Group is expected to under-perform the Leef Brands. But the stock apears to be less risky and, when comparing its historical volatility, Lucid Group is 2.62 times less risky than Leef Brands. The stock trades about -0.03 of its potential returns per unit of risk. The Leef Brands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Leef Brands on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Leef Brands or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Leef Brands
Performance |
| Timeline |
| Lucid Group |
| Leef Brands |
Lucid and Leef Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Leef Brands
The main advantage of trading using opposite Lucid and Leef Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Leef Brands 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 Leef Brands will offset losses from the drop in Leef Brands' long position.The idea behind Lucid Group and Leef Brands 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.| Leef Brands vs. Hasbro Inc | Leef Brands vs. Emerson Radio | Leef Brands vs. Playtech plc | Leef Brands vs. Cumberland Pharmaceuticals |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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