Correlation Between Levi Strauss and Under Armour

Can any of the company-specific risk be diversified away by investing in both Levi Strauss and Under Armour 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 Under Armour 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 Under Armour A, you can compare the effects of market volatilities on Levi Strauss and Under Armour 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 Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and Under Armour.

Diversification Opportunities for Levi Strauss and Under Armour

0.32

Correlation Coefficient

Levi Strauss  Under Armour

Weak diversification

The 3 months correlation between Levi and Under is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and Under Armour A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour A 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour A has no effect on the direction of Levi Strauss i.e., Levi Strauss and Under Armour go up and down completely randomly.

Pair Corralation between Levi Strauss and Under Armour

Given the investment horizon of 90 days Levi Strauss Co is expected to generate 0.86 times more return on investment than Under Armour. However, Levi Strauss Co is 1.17 times less risky than Under Armour. It trades about -0.04 of its potential returns per unit of risk. Under Armour A is currently generating about -0.18 per unit of risk. If you would invest  1,706  in Levi Strauss Co on December 27, 2024 and sell it today you would lose (101.00) from holding Levi Strauss Co or give up 5.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Levi Strauss Co  vs.  Under Armour A

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 fairly strong basic indicators, Levi Strauss is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Under Armour A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Under Armour A 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Levi Strauss and Under Armour

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

The idea behind Levi Strauss Co and Under Armour A 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.