Correlation Between Transocean and Leef Brands
Can any of the company-specific risk be diversified away by investing in both Transocean and Leef 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 Transocean and Leef Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transocean and Leef Brands, you can compare the effects of market volatilities on Transocean and Leef 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 Transocean with a short position of Leef Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transocean and Leef Brands.
Diversification Opportunities for Transocean and Leef Brands
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transocean and Leef is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands and Transocean 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 Transocean are associated (or correlated) with Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of Transocean i.e., Transocean and Leef Brands go up and down completely randomly.
Pair Corralation between Transocean and Leef Brands
Considering the 90-day investment horizon Transocean is expected to under-perform the Leef Brands. But the stock apears to be less risky and, when comparing its historical volatility, Transocean is 4.06 times less risky than Leef Brands. The stock trades about -0.33 of its potential returns per unit of risk. The Leef Brands is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Leef Brands on September 18, 2024 and sell it today you would earn a total of 3.00 from holding Leef Brands or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Transocean vs. Leef Brands
Performance |
| Timeline |
| Transocean |
| Leef Brands |
Transocean and Leef Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transocean and Leef Brands
The main advantage of trading using opposite Transocean and Leef Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean position performs unexpectedly, Leef 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 Leef Brands will offset losses from the drop in Leef Brands' long position.| Transocean vs. Eastman Kodak Co | Transocean vs. Academy Sports Outdoors | Transocean vs. Guangdong Investment Limited | Transocean vs. Molson Coors Brewing |
| Leef Brands vs. Copa Holdings SA | Leef Brands vs. United Airlines Holdings | Leef Brands vs. Delta Air Lines | Leef Brands vs. SkyWest |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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