Correlation Between Global Ship and Leidos Holdings

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

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

Diversification Opportunities for Global Ship and Leidos Holdings

-0.3

Correlation Coefficient

Global Ship  Leidos Holdings

Very good diversification

The 3 months correlation between Global and Leidos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Leidos Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leidos Holdings and Global Ship 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 Global Ship Lease are associated (or correlated) with Leidos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leidos Holdings has no effect on the direction of Global Ship i.e., Global Ship and Leidos Holdings go up and down completely randomly.

Pair Corralation between Global Ship and Leidos Holdings

Assuming the 90 days trading horizon Global Ship is expected to generate 2.36 times less return on investment than Leidos Holdings. But when comparing it to its historical volatility, Global Ship Lease is 1.97 times less risky than Leidos Holdings. It trades about 0.05 of its potential returns per unit of risk. Leidos Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,581  in Leidos Holdings on October 4, 2024 and sell it today you would earn a total of  4,749  from holding Leidos Holdings or generate 49.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Global Ship Lease  vs.  Leidos Holdings

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leidos Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leidos Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Global Ship and Leidos Holdings

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

The idea behind Global Ship Lease and Leidos Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.