Correlation Between Tractor Supply and Leslies

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

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

Diversification Opportunities for Tractor Supply and Leslies

0.32

Correlation Coefficient

Tractor Supply  Leslies

Weak diversification

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

Pair Corralation between Tractor Supply and Leslies

Given the investment horizon of 90 days Tractor Supply is expected to generate 0.65 times more return on investment than Leslies. However, Tractor Supply is 1.53 times less risky than Leslies. It trades about 0.01 of its potential returns per unit of risk. Leslies is currently generating about -0.01 per unit of risk. If you would invest  5,369  in Tractor Supply on October 22, 2024 and sell it today you would lose (3.00) from holding Tractor Supply or give up 0.06% of portfolio value over 90 days.

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

Tractor Supply  vs.  Leslies

Tractor Supply

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tractor Supply has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Tractor Supply and Leslies

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

The idea behind Tractor Supply and Leslies 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 Anywhere module to track or share privately all of your investments from the convenience of any device.