Correlation Between Levi Strauss and On Holding
Can any of the company-specific risk be diversified away by investing in both Levi Strauss and On Holding 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 Levi Strauss and On Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Levi Strauss Co and On Holding, you can compare the effects of market volatilities on Levi Strauss and On Holding 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 Levi Strauss with a short position of On Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and On Holding.
Diversification Opportunities for Levi Strauss and On Holding
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Levi and ONON is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and On Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on On Holding and Levi Strauss 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 Levi Strauss Co are associated (or correlated) with On Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of On Holding has no effect on the direction of Levi Strauss i.e., Levi Strauss and On Holding go up and down completely randomly.
Pair Corralation between Levi Strauss and On Holding
Given the investment horizon of 90 days Levi Strauss Co is expected to under-perform the On Holding. But the stock apears to be less risky and, when comparing its historical volatility, Levi Strauss Co is 1.04 times less risky than On Holding. The stock trades about -0.07 of its potential returns per unit of risk. The On Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,235 in On Holding on September 5, 2024 and sell it today you would earn a total of 1,618 from holding On Holding or generate 38.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Levi Strauss Co vs. On Holding
Performance |
| Timeline |
| Levi Strauss |
| On Holding |
Levi Strauss and On Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Levi Strauss and On Holding
The main advantage of trading using opposite Levi Strauss and On Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Levi Strauss position performs unexpectedly, On Holding 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 On Holding will offset losses from the drop in On Holding's long position.| Levi Strauss vs. LYFT Inc | Levi Strauss vs. Tapestry | Levi Strauss vs. Capri Holdings | Levi Strauss vs. YETI Holdings |
| On Holding vs. Crocs Inc | On Holding vs. Skechers USA | On Holding vs. Nike Inc | On Holding vs. Designer Brands |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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