Correlation Between Leafly Holdings and T Rowe

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

By analyzing existing cross correlation between Leafly Holdings and T Rowe Price, you can compare the effects of market volatilities on Leafly Holdings and T Rowe 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 Leafly Holdings with a short position of T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leafly Holdings and T Rowe.

Diversification Opportunities for Leafly Holdings and T Rowe

-0.33

Correlation Coefficient

Leafly Holdings  T Rowe

Very good diversification

The 3 months correlation between Leafly and RRTLX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Leafly Holdings and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price and Leafly Holdings 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 Leafly Holdings are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Leafly Holdings i.e., Leafly Holdings and T Rowe go up and down completely randomly.

Pair Corralation between Leafly Holdings and T Rowe

Given the investment horizon of 90 days Leafly Holdings is expected to generate 6.89 times more return on investment than T Rowe. However, Leafly Holdings is 6.89 times more volatile than T Rowe Price. It trades about 0.09 of its potential returns per unit of risk. T Rowe Price is currently generating about -0.28 per unit of risk. If you would invest  151.00  in Leafly Holdings on September 22, 2024 and sell it today you would earn a total of  11.00  from holding Leafly Holdings or generate 7.28% return on investment over 90 days.

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

Leafly Holdings  vs.  T Rowe Price

Leafly Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leafly Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, T Rowe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Leafly Holdings and T Rowe

The main advantage of trading using opposite Leafly Holdings and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leafly Holdings position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Leafly Holdings and T Rowe Price 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.