Correlation Between Leef Brands and Real Brands

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

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

Diversification Opportunities for Leef Brands and Real Brands

-0.1

Correlation Coefficient

Leef Brands  Real Brands

Good diversification

The 3 months correlation between Leef and Real is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Leef Brands and Real Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Brands and Leef Brands 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 Leef Brands are associated (or correlated) with Real Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Brands has no effect on the direction of Leef Brands i.e., Leef Brands and Real Brands go up and down completely randomly.

Pair Corralation between Leef Brands and Real Brands

If you would invest  0.01  in Real Brands on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Real Brands or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Leef Brands  vs.  Real Brands

Leef Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leef Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Real Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Real Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Real Brands is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Leef Brands and Real Brands

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

The idea behind Leef Brands and Real Brands 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.