Correlation Between LEO Token and SXP

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

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

Diversification Opportunities for LEO Token and SXP

0.76

Correlation Coefficient

LEO Token  SXP

Poor diversification

The 3 months correlation between LEO and SXP is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding LEO Token and SXP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SXP and LEO Token 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 LEO Token are associated (or correlated) with SXP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SXP has no effect on the direction of LEO Token i.e., LEO Token and SXP go up and down completely randomly.

Pair Corralation between LEO Token and SXP

Assuming the 90 days trading horizon LEO Token is expected to generate 0.39 times more return on investment than SXP. However, LEO Token is 2.58 times less risky than SXP. It trades about 0.02 of its potential returns per unit of risk. SXP is currently generating about 0.0 per unit of risk. If you would invest  569.00  in LEO Token on January 19, 2024 and sell it today you would earn a total of  23.00  from holding LEO Token or generate 4.04% return on investment over 90 days.

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

LEO Token  vs.  SXP

LEO Token

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LEO Token are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, LEO Token exhibited solid returns over the last few months and may actually be approaching a breakup point.

SXP

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SXP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, SXP may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with LEO Token and SXP

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

The idea behind LEO Token and SXP 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.