Correlation Between Leef Brands and Real Brands
Can any of the company-specific risk be diversified away by investing in both Leef Brands and Real 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 Leef Brands and Real Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leef Brands and Real Brands, you can compare the effects of market volatilities on Leef Brands and Real 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 Leef Brands with a short position of Real Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leef Brands and Real Brands.
Diversification Opportunities for Leef Brands and Real Brands
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leef and Real is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Leef Brands and Real Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Brands 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 Real Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Brands has no effect on the direction of Leef Brands i.e., Leef Brands and Real Brands go up and down completely randomly.
Pair Corralation between Leef Brands and Real Brands
Assuming the 90 days horizon Leef Brands is expected to generate 2.89 times less return on investment than Real Brands. But when comparing it to its historical volatility, Leef Brands is 1.79 times less risky than Real Brands. It trades about 0.05 of its potential returns per unit of risk. Real Brands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.33 in Real Brands on August 25, 2024 and sell it today you would lose (0.32) from holding Real Brands or give up 96.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Leef Brands vs. Real Brands
Performance |
| Timeline |
| Leef Brands |
| Real Brands |
Leef Brands and Real Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leef Brands and Real Brands
The main advantage of trading using opposite Leef Brands and Real Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leef Brands position performs unexpectedly, Real 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 Real Brands will offset losses from the drop in Real Brands' long position.| Leef Brands vs. Hasbro Inc | Leef Brands vs. Emerson Radio | Leef Brands vs. Playtech plc | Leef Brands vs. Cumberland Pharmaceuticals |
| Real Brands vs. American Premium Water | Real Brands vs. Puration | Real Brands vs. Kona Gold Solutions | Real Brands vs. Leafbuyer Technologies |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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