Correlation Between Leslies and Boomer Holdings

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

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

Diversification Opportunities for Leslies and Boomer Holdings

0.67

Correlation Coefficient

Leslies  Boomer Holdings

Poor diversification

The 3 months correlation between Leslies and Boomer is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and Boomer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boomer Holdings 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 Boomer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boomer Holdings has no effect on the direction of Leslies i.e., Leslies and Boomer Holdings go up and down completely randomly.

Pair Corralation between Leslies and Boomer Holdings

Given the investment horizon of 90 days Leslies is expected to generate 0.62 times more return on investment than Boomer Holdings. However, Leslies is 1.62 times less risky than Boomer Holdings. It trades about -0.05 of its potential returns per unit of risk. Boomer Holdings is currently generating about -0.08 per unit of risk. If you would invest  1,505  in Leslies on October 20, 2024 and sell it today you would lose (1,289) from holding Leslies or give up 85.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	20.0%
Values	Daily Returns

Leslies  vs.  Boomer Holdings

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 latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Boomer Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boomer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Boomer Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Leslies and Boomer Holdings

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

The idea behind Leslies and Boomer 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.