Correlation Between N Able and Leidos Holdings

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

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

Diversification Opportunities for N Able and Leidos Holdings

0.3

Correlation Coefficient

N Able  Leidos Holdings

Weak diversification

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

Pair Corralation between N Able and Leidos Holdings

Given the investment horizon of 90 days N Able Inc is expected to generate 1.02 times more return on investment than Leidos Holdings. However, N Able is 1.02 times more volatile than Leidos Holdings. It trades about -0.24 of its potential returns per unit of risk. Leidos Holdings is currently generating about -0.46 per unit of risk. 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

N Able Inc  vs.  Leidos Holdings

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.

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.

Pair Trading with N Able and Leidos Holdings

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

The idea behind N Able Inc and Leidos Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.