Correlation Between Leafly Holdings and GABY

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

By analyzing existing cross correlation between Leafly Holdings and GABY Inc, you can compare the effects of market volatilities on Leafly Holdings and GABY 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 GABY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leafly Holdings and GABY.

Diversification Opportunities for Leafly Holdings and GABY

0.0

Correlation Coefficient

Leafly Holdings  GABY

Pay attention - limited upside

The 3 months correlation between Leafly and GABY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leafly Holdings and GABY Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GABY Inc 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 GABY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GABY Inc has no effect on the direction of Leafly Holdings i.e., Leafly Holdings and GABY go up and down completely randomly.

Pair Corralation between Leafly Holdings and GABY

Given the investment horizon of 90 days Leafly Holdings is expected to under-perform the GABY. But the stock apears to be less risky and, when comparing its historical volatility, Leafly Holdings is 3.27 times less risky than GABY. The stock trades about 0.0 of its potential returns per unit of risk. The GABY Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.30  in GABY Inc on August 27, 2024 and sell it today you would lose (0.16) from holding GABY Inc or give up 53.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	81.77%
Values	Daily Returns

Leafly Holdings  vs.  GABY Inc

Leafly Holdings

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Leafly Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GABY Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GABY Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, GABY is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Leafly Holdings and GABY

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

The idea behind Leafly Holdings and GABY 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.