Correlation Between Sprouts Farmers and Leafly Holdings
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers and Leafly Holdings 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 Sprouts Farmers and Leafly Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Leafly Holdings, you can compare the effects of market volatilities on Sprouts Farmers and Leafly Holdings 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 Sprouts Farmers with a short position of Leafly Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Leafly Holdings.
Diversification Opportunities for Sprouts Farmers and Leafly Holdings
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sprouts and Leafly is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Leafly Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leafly Holdings and Sprouts Farmers 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 Sprouts Farmers Market are associated (or correlated) with Leafly Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leafly Holdings has no effect on the direction of Sprouts Farmers i.e., Sprouts Farmers and Leafly Holdings go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Leafly Holdings
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 0.12 times more return on investment than Leafly Holdings. However, Sprouts Farmers Market is 8.59 times less risky than Leafly Holdings. It trades about 0.1 of its potential returns per unit of risk. Leafly Holdings is currently generating about -0.34 per unit of risk. If you would invest 13,469 in Sprouts Farmers Market on October 20, 2024 and sell it today you would earn a total of 456.00 from holding Sprouts Farmers Market or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Leafly Holdings
Performance |
| Timeline |
| Sprouts Farmers Market |
| Leafly Holdings |
Sprouts Farmers and Leafly Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Leafly Holdings
The main advantage of trading using opposite Sprouts Farmers and Leafly Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers position performs unexpectedly, Leafly Holdings 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 Leafly Holdings will offset losses from the drop in Leafly Holdings' long position.| Sprouts Farmers vs. Sendas Distribuidora SA | Sprouts Farmers vs. Natural Grocers by | Sprouts Farmers vs. Albertsons Companies | Sprouts Farmers vs. Ingles Markets Incorporated |
| Leafly Holdings vs. Kiaro Holdings Corp | Leafly Holdings vs. Allstar Health Brands | Leafly Holdings vs. China Jo Jo Drugstores |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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