Correlation Between Leafly Holdings and Allstar Health

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

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

Diversification Opportunities for Leafly Holdings and Allstar Health

0.16

Correlation Coefficient

Leafly Holdings  Allstar Health

Average diversification

The 3 months correlation between Leafly and Allstar is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Leafly Holdings and Allstar Health Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstar Health Brands and Leafly 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 Leafly Holdings are associated (or correlated) with Allstar Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstar Health Brands has no effect on the direction of Leafly Holdings i.e., Leafly Holdings and Allstar Health go up and down completely randomly.

Pair Corralation between Leafly Holdings and Allstar Health

Assuming the 90 days horizon Leafly Holdings is expected to generate 8.64 times more return on investment than Allstar Health. However, Leafly Holdings is 8.64 times more volatile than Allstar Health Brands. It trades about 0.1 of its potential returns per unit of risk. Allstar Health Brands is currently generating about 0.05 per unit of risk. If you would invest  2.08  in Leafly Holdings on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Leafly Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.48%
Values	Daily Returns

Leafly Holdings  vs.  Allstar Health Brands

Leafly Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leafly Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Leafly Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Allstar Health Brands

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allstar Health Brands are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Allstar Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leafly Holdings and Allstar Health

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

The idea behind Leafly Holdings and Allstar Health Brands 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.