Correlation Between Levi Strauss and PVH Corp

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

By analyzing existing cross correlation between Levi Strauss Co and PVH Corp, you can compare the effects of market volatilities on Levi Strauss and PVH 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 Levi Strauss with a short position of PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and PVH Corp.

Diversification Opportunities for Levi Strauss and PVH Corp

0.27

Correlation Coefficient

Levi Strauss  PVH Corp

Modest diversification

The 3 months correlation between Levi and PVH is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp and Levi Strauss 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 Levi Strauss Co are associated (or correlated) with PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Levi Strauss i.e., Levi Strauss and PVH Corp go up and down completely randomly.

Pair Corralation between Levi Strauss and PVH Corp

Given the investment horizon of 90 days Levi Strauss Co is expected to generate 0.84 times more return on investment than PVH Corp. However, Levi Strauss Co is 1.2 times less risky than PVH Corp. It trades about -0.05 of its potential returns per unit of risk. PVH Corp is currently generating about -0.31 per unit of risk. If you would invest  1,734  in Levi Strauss Co on December 26, 2024 and sell it today you would lose (130.00) from holding Levi Strauss Co or give up 7.5% of portfolio value over 90 days.

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

Levi Strauss Co  vs.  PVH Corp

Levi Strauss

Risk-Adjusted Performance

Very Weak

Over the last 90 days Levi Strauss Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

PVH Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PVH Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Levi Strauss and PVH Corp

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

The idea behind Levi Strauss Co and PVH 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.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.