Correlation Between Leafly Holdings and PetMed Express

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

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

Diversification Opportunities for Leafly Holdings and PetMed Express

0.75

Correlation Coefficient

Leafly Holdings  PetMed Express

Poor diversification

The 3 months correlation between Leafly and PetMed is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Leafly Holdings and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express 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 PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of Leafly Holdings i.e., Leafly Holdings and PetMed Express go up and down completely randomly.

Pair Corralation between Leafly Holdings and PetMed Express

Given the investment horizon of 90 days Leafly Holdings is expected to generate 5.75 times more return on investment than PetMed Express. However, Leafly Holdings is 5.75 times more volatile than PetMed Express. It trades about -0.02 of its potential returns per unit of risk. PetMed Express is currently generating about -0.31 per unit of risk. If you would invest  343.00  in Leafly Holdings on February 4, 2024 and sell it today you would lose (58.00) from holding Leafly Holdings or give up 16.91% of portfolio value over 90 days.

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

Leafly Holdings  vs.  PetMed Express

Leafly Holdings

Risk-Adjusted Performance

0 of 100

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 fairly strong essential indicators, Leafly Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PetMed Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetMed Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Leafly Holdings and PetMed Express

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

The idea behind Leafly Holdings and PetMed Express 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.