Correlation Between Leslies and Group 1

Can any of the company-specific risk be diversified away by investing in both Leslies and Group 1 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 Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leslies and Group 1 Automotive, you can compare the effects of market volatilities on Leslies and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leslies and Group 1.

Diversification Opportunities for Leslies and Group 1

-0.43

Correlation Coefficient

Leslies  Group 1

Very good diversification

The 3 months correlation between Leslies and Group is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Leslies i.e., Leslies and Group 1 go up and down completely randomly.

Pair Corralation between Leslies and Group 1

Given the investment horizon of 90 days Leslies is expected to under-perform the Group 1. In addition to that, Leslies is 2.53 times more volatile than Group 1 Automotive. It trades about -0.05 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about 0.09 per unit of volatility. If you would invest  19,436  in Group 1 Automotive on October 11, 2024 and sell it today you would earn a total of  22,634  from holding Group 1 Automotive or generate 116.45% return on investment over 90 days.

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

Leslies  vs.  Group 1 Automotive

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.

Group 1 Automotive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Group 1 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leslies and Group 1

The main advantage of trading using opposite Leslies and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leslies position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind Leslies and Group 1 Automotive 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.