Correlation Between Clever Leaves and Mesabi Trust

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

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

Diversification Opportunities for Clever Leaves and Mesabi Trust

0.11

Correlation Coefficient

Clever Leaves  Mesabi Trust

Average diversification

The 3 months correlation between Clever and Mesabi is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Clever Leaves Holdings and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust and Clever Leaves 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 Clever Leaves Holdings are associated (or correlated) with Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of Clever Leaves i.e., Clever Leaves and Mesabi Trust go up and down completely randomly.

Pair Corralation between Clever Leaves and Mesabi Trust

Given the investment horizon of 90 days Clever Leaves Holdings is expected to generate 125.32 times more return on investment than Mesabi Trust. However, Clever Leaves is 125.32 times more volatile than Mesabi Trust. It trades about 0.4 of its potential returns per unit of risk. Mesabi Trust is currently generating about 0.11 per unit of risk. If you would invest  0.01  in Clever Leaves Holdings on September 23, 2024 and sell it today you would earn a total of  0.01  from holding Clever Leaves Holdings or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Clever Leaves Holdings  vs.  Mesabi Trust

Clever Leaves Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clever Leaves Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Clever Leaves reported solid returns over the last few months and may actually be approaching a breakup point.

Mesabi Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesabi Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clever Leaves and Mesabi Trust

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

The idea behind Clever Leaves Holdings and Mesabi Trust 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.