Correlation Between Levi Strauss and Code Green

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

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

Diversification Opportunities for Levi Strauss and Code Green

-0.79

Correlation Coefficient

Levi Strauss  Code Green

Pay attention - limited upside

The 3 months correlation between Levi and Code is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and Code Green Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Code Green Apparel and Levi Strauss 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 Levi Strauss Co are associated (or correlated) with Code Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Code Green Apparel has no effect on the direction of Levi Strauss i.e., Levi Strauss and Code Green go up and down completely randomly.

Pair Corralation between Levi Strauss and Code Green

Given the investment horizon of 90 days Levi Strauss is expected to generate 4.63 times less return on investment than Code Green. But when comparing it to its historical volatility, Levi Strauss Co is 11.9 times less risky than Code Green. It trades about 0.18 of its potential returns per unit of risk. Code Green Apparel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Code Green Apparel on March 14, 2024 and sell it today you would lose (0.07) from holding Code Green Apparel or give up 77.78% of portfolio value over 90 days.

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

Levi Strauss Co  vs.  Code Green Apparel

Levi Strauss

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Levi Strauss Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Levi Strauss demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Code Green Apparel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Code Green Apparel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Code Green exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Levi Strauss and Code Green

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

The idea behind Levi Strauss Co and Code Green Apparel 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..