Correlation Between Levi Strauss and PVH Corp
Can any of the company-specific risk be diversified away by investing in both Levi Strauss and PVH Corp 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 PVH Corp 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 PVH Corp, you can compare the effects of market volatilities on Levi Strauss and PVH Corp 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and PVH Corp.
Diversification Opportunities for Levi Strauss and PVH Corp
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Levi and PVH is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Levi Strauss i.e., Levi Strauss and PVH Corp go up and down completely randomly.
Pair Corralation between Levi Strauss and PVH Corp
Given the investment horizon of 90 days Levi Strauss Co is expected to generate 0.75 times more return on investment than PVH Corp. However, Levi Strauss Co is 1.32 times less risky than PVH Corp. It trades about 0.2 of its potential returns per unit of risk. PVH Corp is currently generating about -0.07 per unit of risk. If you would invest 1,809 in Levi Strauss Co on February 14, 2024 and sell it today you would earn a total of 459.00 from holding Levi Strauss Co or generate 25.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Levi Strauss Co vs. PVH Corp
Performance |
Timeline |
Levi Strauss |
PVH Corp |
Levi Strauss and PVH Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Levi Strauss and PVH Corp
The main advantage of trading using opposite Levi Strauss and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Levi Strauss position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp's long position.Levi Strauss vs. LYFT Inc | Levi Strauss vs. Tapestry | Levi Strauss vs. Capri Holdings | Levi Strauss vs. YETI Holdings |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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