Correlation Between Leslies and Group 1
Can any of the company-specific risk be diversified away by investing in both Leslies and Group 1 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 Leslies and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leslies and Group 1 Automotive, you can compare the effects of market volatilities on Leslies and Group 1 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 Leslies with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leslies and Group 1.
Diversification Opportunities for Leslies and Group 1
Excellent diversification
The 3 months correlation between Leslies and Group is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and Leslies 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 Leslies are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Leslies i.e., Leslies and Group 1 go up and down completely randomly.
Pair Corralation between Leslies and Group 1
Given the investment horizon of 90 days Leslies is expected to generate 21.74 times less return on investment than Group 1. In addition to that, Leslies is 1.92 times more volatile than Group 1 Automotive. It trades about 0.01 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about 0.42 per unit of volatility. If you would invest 41,911 in Group 1 Automotive on October 30, 2024 and sell it today you would earn a total of 3,535 from holding Group 1 Automotive or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leslies vs. Group 1 Automotive
Performance |
| Timeline |
| Leslies |
| Group 1 Automotive |
Leslies and Group 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leslies and Group 1
The main advantage of trading using opposite Leslies and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leslies position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.| Leslies vs. Sally Beauty Holdings | Leslies vs. ODP Corp | Leslies vs. 1 800 FLOWERSCOM | Leslies vs. Caseys General Stores |
| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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