Correlation Between VF and Levi Strauss

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

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

Diversification Opportunities for VF and Levi Strauss

-0.4

Correlation Coefficient

VF  Levi Strauss

Very good diversification

The 3 months correlation between VF and Levi is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss and VF 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 VF Corporation are associated (or correlated) with Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of VF i.e., VF and Levi Strauss go up and down completely randomly.

Pair Corralation between VF and Levi Strauss

Assuming the 90 days horizon VF Corporation is expected to generate 1.64 times more return on investment than Levi Strauss. However, VF is 1.64 times more volatile than Levi Strauss Co. It trades about 0.1 of its potential returns per unit of risk. Levi Strauss Co is currently generating about -0.07 per unit of risk. If you would invest  1,300  in VF Corporation on September 24, 2024 and sell it today you would earn a total of  759.00  from holding VF Corporation or generate 58.38% return on investment over 90 days.

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

VF Corp.  vs.  Levi Strauss Co

VF Corporation

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VF reported solid returns over the last few months and may actually be approaching a breakup point.

Levi Strauss

Risk-Adjusted Performance

0 of 100

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 fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with VF and Levi Strauss

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

The idea behind VF Corporation and Levi Strauss Co 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.