Correlation Between Leslies and Pet Acquisition

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

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

Diversification Opportunities for Leslies and Pet Acquisition

-0.17

Correlation Coefficient

Leslies  Pet Acquisition

Good diversification

The 3 months correlation between Leslies and Pet is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and Pet Acquisition LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Acquisition LLC 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 Pet Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Acquisition LLC has no effect on the direction of Leslies i.e., Leslies and Pet Acquisition go up and down completely randomly.

Pair Corralation between Leslies and Pet Acquisition

Given the investment horizon of 90 days Leslies is expected to under-perform the Pet Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Leslies is 1.07 times less risky than Pet Acquisition. The stock trades about -0.03 of its potential returns per unit of risk. The Pet Acquisition LLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  306.00  in Pet Acquisition LLC on September 2, 2024 and sell it today you would earn a total of  121.00  from holding Pet Acquisition LLC or generate 39.54% return on investment over 90 days.

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

Leslies  vs.  Pet Acquisition LLC

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.

Pet Acquisition LLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pet Acquisition LLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Pet Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leslies and Pet Acquisition

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

The idea behind Leslies and Pet Acquisition LLC 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.