Correlation Between Genuine Parts and Leslies

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

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

Diversification Opportunities for Genuine Parts and Leslies

0.05

Correlation Coefficient

Genuine Parts  Leslies

Significant diversification

The 3 months correlation between Genuine and Leslies is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Leslies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leslies and Genuine Parts 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 Genuine Parts Co are associated (or correlated) with Leslies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leslies has no effect on the direction of Genuine Parts i.e., Genuine Parts and Leslies go up and down completely randomly.

Pair Corralation between Genuine Parts and Leslies

Considering the 90-day investment horizon Genuine Parts Co is expected to under-perform the Leslies. In addition to that, Genuine Parts is 1.25 times more volatile than Leslies. It trades about -0.11 of its total potential returns per unit of risk. Leslies is currently generating about 0.16 per unit of volatility. If you would invest  274.00  in Leslies on August 8, 2024 and sell it today you would earn a total of  34.00  from holding Leslies or generate 12.41% return on investment over 90 days.

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

Genuine Parts Co  vs.  Leslies

Genuine Parts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genuine Parts Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Leslies

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Leslies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Leslies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Genuine Parts and Leslies

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

The idea behind Genuine Parts Co and Leslies 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.