Correlation Between Morningstar Unconstrained and Leafly Holdings

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

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

Diversification Opportunities for Morningstar Unconstrained and Leafly Holdings

-0.08

Correlation Coefficient

Morningstar Unconstrained  Leafly Holdings

Good diversification

The 3 months correlation between Morningstar and Leafly is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Unconstrained Allo and Leafly Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leafly Holdings and Morningstar Unconstrained 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 Morningstar Unconstrained Allocation are associated (or correlated) with Leafly Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leafly Holdings has no effect on the direction of Morningstar Unconstrained i.e., Morningstar Unconstrained and Leafly Holdings go up and down completely randomly.

Pair Corralation between Morningstar Unconstrained and Leafly Holdings

Assuming the 90 days horizon Morningstar Unconstrained Allocation is expected to under-perform the Leafly Holdings. But the mutual fund apears to be less risky and, when comparing its historical volatility, Morningstar Unconstrained Allocation is 6.19 times less risky than Leafly Holdings. The mutual fund trades about -0.3 of its potential returns per unit of risk. The Leafly Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.59  in Leafly Holdings on September 22, 2024 and sell it today you would lose (0.13) from holding Leafly Holdings or give up 5.02% of portfolio value over 90 days.

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

Morningstar Unconstrained Allo  vs.  Leafly Holdings

Morningstar Unconstrained

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morningstar Unconstrained Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Morningstar Unconstrained and Leafly Holdings

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

The idea behind Morningstar Unconstrained Allocation and Leafly Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.