Correlation Between Leafly Holdings and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Leafly Holdings and Dow Jones 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 Leafly Holdings and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leafly Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on Leafly Holdings and Dow Jones 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 Leafly Holdings with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leafly Holdings and Dow Jones.
Diversification Opportunities for Leafly Holdings and Dow Jones
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Leafly and Dow is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Leafly Holdings and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Leafly Holdings 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 Leafly Holdings are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Leafly Holdings i.e., Leafly Holdings and Dow Jones go up and down completely randomly.
Pair Corralation between Leafly Holdings and Dow Jones
Assuming the 90 days horizon Leafly Holdings is expected to generate 145.8 times more return on investment than Dow Jones. However, Leafly Holdings is 145.8 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of risk. If you would invest 2.05 in Leafly Holdings on August 24, 2024 and sell it today you would earn a total of 0.54 from holding Leafly Holdings or generate 26.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.8% |
| Values | Daily Returns |
Leafly Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
Leafly Holdings and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Leafly Holdings
Pair trading matchups for Leafly Holdings
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Leafly Holdings and Dow Jones
The main advantage of trading using opposite Leafly Holdings and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leafly Holdings position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Leafly Holdings vs. Leafly Holdings | Leafly Holdings vs. WM Technology | Leafly Holdings vs. Revelation Biosciences | Leafly Holdings vs. AEye Inc |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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