Correlation Between Leidos Holdings and Globant SA

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

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

Diversification Opportunities for Leidos Holdings and Globant SA

-0.74

Correlation Coefficient

Leidos Holdings  Globant SA

Pay attention - limited upside

The 3 months correlation between Leidos and Globant is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Leidos Holdings and Globant SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globant SA 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 Globant SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globant SA has no effect on the direction of Leidos Holdings i.e., Leidos Holdings and Globant SA go up and down completely randomly.

Pair Corralation between Leidos Holdings and Globant SA

Given the investment horizon of 90 days Leidos Holdings is expected to generate 0.53 times more return on investment than Globant SA. However, Leidos Holdings is 1.87 times less risky than Globant SA. It trades about 0.06 of its potential returns per unit of risk. Globant SA is currently generating about -0.28 per unit of risk. If you would invest  13,042  in Leidos Holdings on January 31, 2024 and sell it today you would earn a total of  120.00  from holding Leidos Holdings or generate 0.92% return on investment over 90 days.

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

Leidos Holdings  vs.  Globant SA

Leidos Holdings

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leidos Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Leidos Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Globant SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globant SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Leidos Holdings and Globant SA

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

The idea behind Leidos Holdings and Globant SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.