Correlation Between American Leisure and Forwardly

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

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

Diversification Opportunities for American Leisure and Forwardly

0.36

Correlation Coefficient

American Leisure  Forwardly

Weak diversification

The 3 months correlation between American and Forwardly is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Leisure Holdings and Forwardly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forwardly and American Leisure 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 American Leisure Holdings are associated (or correlated) with Forwardly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forwardly has no effect on the direction of American Leisure i.e., American Leisure and Forwardly go up and down completely randomly.

Pair Corralation between American Leisure and Forwardly

Given the investment horizon of 90 days American Leisure Holdings is expected to generate 4.4 times more return on investment than Forwardly. However, American Leisure is 4.4 times more volatile than Forwardly. It trades about 0.18 of its potential returns per unit of risk. Forwardly is currently generating about 0.04 per unit of risk. If you would invest  0.01  in American Leisure Holdings on September 28, 2024 and sell it today you would earn a total of  0.01  from holding American Leisure Holdings or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.07%
Values	Daily Returns

American Leisure Holdings  vs.  Forwardly

American Leisure Holdings

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Leisure Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal essential indicators, American Leisure demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Forwardly

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Forwardly are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Forwardly showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Leisure and Forwardly

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

The idea behind American Leisure Holdings and Forwardly 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.