Correlation Between Leef Brands and MERCK Kommanditgesells
Can any of the company-specific risk be diversified away by investing in both Leef Brands and MERCK Kommanditgesells 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 MERCK Kommanditgesells into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leef Brands and MERCK Kommanditgesellschaft auf, you can compare the effects of market volatilities on Leef Brands and MERCK Kommanditgesells 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 MERCK Kommanditgesells. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leef Brands and MERCK Kommanditgesells.
Diversification Opportunities for Leef Brands and MERCK Kommanditgesells
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leef and MERCK is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Leef Brands and MERCK Kommanditgesellschaft au in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK Kommanditgesells 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 MERCK Kommanditgesells. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK Kommanditgesells has no effect on the direction of Leef Brands i.e., Leef Brands and MERCK Kommanditgesells go up and down completely randomly.
Pair Corralation between Leef Brands and MERCK Kommanditgesells
Assuming the 90 days horizon Leef Brands is expected to generate 4.85 times more return on investment than MERCK Kommanditgesells. However, Leef Brands is 4.85 times more volatile than MERCK Kommanditgesellschaft auf. It trades about 0.04 of its potential returns per unit of risk. MERCK Kommanditgesellschaft auf is currently generating about 0.0 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 | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Leef Brands vs. MERCK Kommanditgesellschaft au
Performance |
| Timeline |
| Leef Brands |
| MERCK Kommanditgesells |
Leef Brands and MERCK Kommanditgesells Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leef Brands and MERCK Kommanditgesells
The main advantage of trading using opposite Leef Brands and MERCK Kommanditgesells positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leef Brands position performs unexpectedly, MERCK Kommanditgesells 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 MERCK Kommanditgesells will offset losses from the drop in MERCK Kommanditgesells' long position.| Leef Brands vs. Apple Inc | Leef Brands vs. Microsoft | Leef Brands vs. Alphabet Inc Class C | Leef Brands vs. Meta Platforms |
| MERCK Kommanditgesells vs. Greater Cannabis | MERCK Kommanditgesells vs. Merck KGaA ADR | MERCK Kommanditgesells vs. For The Earth | MERCK Kommanditgesells vs. Indo Global Exchange |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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