Correlation Between Levi Strauss and Ree Automotive
Can any of the company-specific risk be diversified away by investing in both Levi Strauss and Ree Automotive 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 Ree Automotive 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 Ree Automotive Holding, you can compare the effects of market volatilities on Levi Strauss and Ree Automotive 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 Ree Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and Ree Automotive.
Diversification Opportunities for Levi Strauss and Ree Automotive
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Levi and Ree is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and Ree Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ree Automotive 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 Ree Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ree Automotive Holding has no effect on the direction of Levi Strauss i.e., Levi Strauss and Ree Automotive go up and down completely randomly.
Pair Corralation between Levi Strauss and Ree Automotive
Given the investment horizon of 90 days Levi Strauss is expected to generate 1.13 times less return on investment than Ree Automotive. But when comparing it to its historical volatility, Levi Strauss Co is 3.08 times less risky than Ree Automotive. It trades about 0.04 of its potential returns per unit of risk. Ree Automotive Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,185 in Ree Automotive Holding on September 1, 2024 and sell it today you would lose (412.00) from holding Ree Automotive Holding or give up 34.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Levi Strauss Co vs. Ree Automotive Holding
Performance |
| Timeline |
| Levi Strauss |
| Ree Automotive Holding |
Levi Strauss and Ree Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Levi Strauss and Ree Automotive
The main advantage of trading using opposite Levi Strauss and Ree Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Levi Strauss position performs unexpectedly, Ree Automotive 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 Ree Automotive will offset losses from the drop in Ree Automotive's long position.| Levi Strauss vs. Deckers Outdoor | Levi Strauss vs. On Holding | Levi Strauss vs. Crocs Inc | Levi Strauss vs. Designer Brands |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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