Correlation Between Leslies and Joann

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

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

Diversification Opportunities for Leslies and Joann

0.36

Correlation Coefficient

Leslies  Joann

Weak diversification

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

Pair Corralation between Leslies and Joann

Given the investment horizon of 90 days Leslies is expected to generate 0.88 times more return on investment than Joann. However, Leslies is 1.13 times less risky than Joann. It trades about -0.04 of its potential returns per unit of risk. Joann Inc is currently generating about -0.17 per unit of risk. If you would invest  1,287  in Leslies on September 29, 2024 and sell it today you would lose (1,064) from holding Leslies or give up 82.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	24.37%
Values	Daily Returns

Leslies  vs.  Joann Inc

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 inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Joann Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joann Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Joann is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Leslies and Joann

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

The idea behind Leslies and Joann Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.