Correlation Between Leidos Holdings and N Able

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

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

Diversification Opportunities for Leidos Holdings and N Able

0.3

Correlation Coefficient

Leidos Holdings  N Able

Weak diversification

The 3 months correlation between Leidos and NABL is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Leidos Holdings and N Able Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Able Inc and Leidos Holdings 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 Leidos Holdings are associated (or correlated) with N Able. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Able Inc has no effect on the direction of Leidos Holdings i.e., Leidos Holdings and N Able go up and down completely randomly.

Pair Corralation between Leidos Holdings and N Able

Given the investment horizon of 90 days Leidos Holdings is expected to under-perform the N Able. But the stock apears to be less risky and, when comparing its historical volatility, Leidos Holdings is 1.02 times less risky than N Able. The stock trades about -0.46 of its potential returns per unit of risk. The N Able Inc is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  1,037  in N Able Inc on September 23, 2024 and sell it today you would lose (71.00) from holding N Able Inc or give up 6.85% of portfolio value over 90 days.

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

Leidos Holdings  vs.  N Able Inc

Leidos Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leidos Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

N Able Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days N Able Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Leidos Holdings and N Able

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

The idea behind Leidos Holdings and N Able Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.