Correlation Between Leslies and ODP Corp

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

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

Diversification Opportunities for Leslies and ODP Corp

0.96

Correlation Coefficient

Leslies  ODP Corp

Almost no diversification

The 3 months correlation between Leslies and ODP is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and ODP Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODP Corp 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 ODP Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODP Corp has no effect on the direction of Leslies i.e., Leslies and ODP Corp go up and down completely randomly.

Pair Corralation between Leslies and ODP Corp

Given the investment horizon of 90 days Leslies is expected to under-perform the ODP Corp. In addition to that, Leslies is 1.25 times more volatile than ODP Corp. It trades about -0.24 of its total potential returns per unit of risk. ODP Corp is currently generating about -0.13 per unit of volatility. If you would invest  2,175  in ODP Corp on December 28, 2024 and sell it today you would lose (731.00) from holding ODP Corp or give up 33.61% of portfolio value over 90 days.

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

Leslies  vs.  ODP Corp

Leslies

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ODP Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ODP Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Leslies and ODP Corp

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

The idea behind Leslies and ODP Corp 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.

Check out your portfolio center.

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.