Correlation Between Leslies and Barnes Noble

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

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

Diversification Opportunities for Leslies and Barnes Noble

-0.32

Correlation Coefficient

Leslies  Barnes Noble

Very good diversification

The 3 months correlation between Leslies and Barnes is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and Barnes Noble Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Noble Education and Leslies 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 Leslies are associated (or correlated) with Barnes Noble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Noble Education has no effect on the direction of Leslies i.e., Leslies and Barnes Noble go up and down completely randomly.

Pair Corralation between Leslies and Barnes Noble

Given the investment horizon of 90 days Leslies is expected to under-perform the Barnes Noble. But the stock apears to be less risky and, when comparing its historical volatility, Leslies is 1.05 times less risky than Barnes Noble. The stock trades about -0.05 of its potential returns per unit of risk. The Barnes Noble Education is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  957.00  in Barnes Noble Education on October 7, 2024 and sell it today you would earn a total of  65.00  from holding Barnes Noble Education or generate 6.79% return on investment over 90 days.

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

Leslies  vs.  Barnes Noble Education

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.

Barnes Noble Education

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Noble Education are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Barnes Noble exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leslies and Barnes Noble

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

The idea behind Leslies and Barnes Noble Education 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.