Correlation Between Arko Corp and Leslies

Can any of the company-specific risk be diversified away by investing in both Arko Corp and Leslies 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 Arko Corp and Leslies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arko Corp and Leslies, you can compare the effects of market volatilities on Arko Corp and Leslies 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 Arko Corp with a short position of Leslies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arko Corp and Leslies.

Diversification Opportunities for Arko Corp and Leslies

0.0

Correlation Coefficient

Arko Corp  Leslies

Pay attention - limited upside

The 3 months correlation between Arko and Leslies is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arko Corp and Leslies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leslies and Arko Corp 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 Arko Corp are associated (or correlated) with Leslies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leslies has no effect on the direction of Arko Corp i.e., Arko Corp and Leslies go up and down completely randomly.

Pair Corralation between Arko Corp and Leslies

Given the investment horizon of 90 days Arko Corp is expected to generate 0.71 times more return on investment than Leslies. However, Arko Corp is 1.41 times less risky than Leslies. It trades about -0.28 of its potential returns per unit of risk. Leslies is currently generating about -0.26 per unit of risk. If you would invest  725.00  in Arko Corp on October 10, 2024 and sell it today you would lose (90.00) from holding Arko Corp or give up 12.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Arko Corp  vs.  Leslies

Arko Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Arko Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Arko Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Leslies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leslies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Leslies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Arko Corp and Leslies

The main advantage of trading using opposite Arko Corp and Leslies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arko Corp position performs unexpectedly, Leslies 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 Leslies will offset losses from the drop in Leslies' long position.

The idea behind Arko Corp and Leslies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.