Correlation Between Leslies and Card Factory

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

By analyzing existing cross correlation between Leslies and Card Factory plc, you can compare the effects of market volatilities on Leslies and Card Factory 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 Card Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leslies and Card Factory.

Diversification Opportunities for Leslies and Card Factory

-0.36

Correlation Coefficient

Leslies  Card Factory

Very good diversification

The 3 months correlation between Leslies and Card is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and Card Factory plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Card Factory plc 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 Card Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Card Factory plc has no effect on the direction of Leslies i.e., Leslies and Card Factory go up and down completely randomly.

Pair Corralation between Leslies and Card Factory

Given the investment horizon of 90 days Leslies is expected to under-perform the Card Factory. But the stock apears to be less risky and, when comparing its historical volatility, Leslies is 1.42 times less risky than Card Factory. The stock trades about -0.04 of its potential returns per unit of risk. The Card Factory plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Card Factory plc on October 5, 2024 and sell it today you would earn a total of  37.00  from holding Card Factory plc or generate 31.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Leslies  vs.  Card Factory plc

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.

Card Factory plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Card Factory plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Card Factory may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Leslies and Card Factory

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

The idea behind Leslies and Card Factory plc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.