Correlation Between Fair Oaks and Leroy Seafood

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

By analyzing existing cross correlation between Fair Oaks Income and Leroy Seafood Group, you can compare the effects of market volatilities on Fair Oaks and Leroy Seafood 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 Fair Oaks with a short position of Leroy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Leroy Seafood.

Diversification Opportunities for Fair Oaks and Leroy Seafood

-0.22

Correlation Coefficient

Fair Oaks  Leroy Seafood

Very good diversification

The 3 months correlation between Fair and Leroy is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Leroy Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leroy Seafood Group and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with Leroy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leroy Seafood Group has no effect on the direction of Fair Oaks i.e., Fair Oaks and Leroy Seafood go up and down completely randomly.

Pair Corralation between Fair Oaks and Leroy Seafood

Assuming the 90 days trading horizon Fair Oaks is expected to generate 1.33 times less return on investment than Leroy Seafood. But when comparing it to its historical volatility, Fair Oaks Income is 3.66 times less risky than Leroy Seafood. It trades about 0.13 of its potential returns per unit of risk. Leroy Seafood Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,171  in Leroy Seafood Group on October 6, 2024 and sell it today you would earn a total of  758.00  from holding Leroy Seafood Group or generate 18.17% return on investment over 90 days.

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

Fair Oaks Income  vs.  Leroy Seafood Group

Fair Oaks Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Oaks Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fair Oaks is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Leroy Seafood Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leroy Seafood Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Leroy Seafood is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fair Oaks and Leroy Seafood

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

The idea behind Fair Oaks Income and Leroy Seafood Group 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.