Correlation Between Leef Brands and Eisai Co
Can any of the company-specific risk be diversified away by investing in both Leef Brands and Eisai Co 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 Leef Brands and Eisai Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leef Brands and Eisai Co, you can compare the effects of market volatilities on Leef Brands and Eisai Co 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 Leef Brands with a short position of Eisai Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leef Brands and Eisai Co.
Diversification Opportunities for Leef Brands and Eisai Co
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leef and Eisai is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Leef Brands and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai Co and Leef Brands 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 Leef Brands are associated (or correlated) with Eisai Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai Co has no effect on the direction of Leef Brands i.e., Leef Brands and Eisai Co go up and down completely randomly.
Pair Corralation between Leef Brands and Eisai Co
Assuming the 90 days horizon Leef Brands is expected to generate 3.71 times more return on investment than Eisai Co. However, Leef Brands is 3.71 times more volatile than Eisai Co. It trades about 0.04 of its potential returns per unit of risk. Eisai Co is currently generating about -0.04 per unit of risk. If you would invest 24.00 in Leef Brands on August 29, 2024 and sell it today you would lose (9.00) from holding Leef Brands or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.17% |
| Values | Daily Returns |
Leef Brands vs. Eisai Co
Performance |
| Timeline |
| Leef Brands |
| Eisai Co |
Leef Brands and Eisai Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leef Brands and Eisai Co
The main advantage of trading using opposite Leef Brands and Eisai Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leef Brands position performs unexpectedly, Eisai Co 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 Eisai Co will offset losses from the drop in Eisai Co's long position.| Leef Brands vs. Apple Inc | Leef Brands vs. Microsoft | Leef Brands vs. Alphabet Inc Class C | Leef Brands vs. Meta Platforms |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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