Correlation Between Haverty Furniture and WPP PLC
Can any of the company-specific risk be diversified away by investing in both Haverty Furniture and WPP PLC 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 Haverty Furniture and WPP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haverty Furniture Companies and WPP PLC, you can compare the effects of market volatilities on Haverty Furniture and WPP PLC 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 Haverty Furniture with a short position of WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haverty Furniture and WPP PLC.
Diversification Opportunities for Haverty Furniture and WPP PLC
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Haverty and WPP is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and WPP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC and Haverty Furniture 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 Haverty Furniture Companies are associated (or correlated) with WPP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP PLC has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and WPP PLC go up and down completely randomly.
Pair Corralation between Haverty Furniture and WPP PLC
Assuming the 90 days horizon Haverty Furniture is expected to generate 1.26 times less return on investment than WPP PLC. In addition to that, Haverty Furniture is 1.56 times more volatile than WPP PLC. It trades about 0.12 of its total potential returns per unit of risk. WPP PLC is currently generating about 0.24 per unit of volatility. If you would invest 980.00 in WPP PLC on September 14, 2024 and sell it today you would earn a total of 70.00 from holding WPP PLC or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haverty Furniture Companies vs. WPP PLC
Performance |
| Timeline |
| Haverty Furniture |
| WPP PLC |
Haverty Furniture and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haverty Furniture and WPP PLC
The main advantage of trading using opposite Haverty Furniture and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture position performs unexpectedly, WPP PLC 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 WPP PLC will offset losses from the drop in WPP PLC's long position.| Haverty Furniture vs. Lowes Companies | Haverty Furniture vs. Superior Plus Corp | Haverty Furniture vs. SIVERS SEMICONDUCTORS AB | Haverty Furniture vs. NorAm Drilling AS |
| WPP PLC vs. Tri Pointe Homes | WPP PLC vs. HomeToGo SE | WPP PLC vs. Aedas Homes SA | WPP PLC vs. Haverty Furniture Companies |
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 Stocks Directory module to find actively traded stocks across global markets.
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