Correlation Between Haverty Furniture and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Haverty Furniture and Aedas Homes 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 Aedas Homes 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 Aedas Homes SA, you can compare the effects of market volatilities on Haverty Furniture and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haverty Furniture and Aedas Homes.
Diversification Opportunities for Haverty Furniture and Aedas Homes
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Haverty and Aedas is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA 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 Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and Aedas Homes go up and down completely randomly.
Pair Corralation between Haverty Furniture and Aedas Homes
Assuming the 90 days horizon Haverty Furniture is expected to generate 9.85 times less return on investment than Aedas Homes. But when comparing it to its historical volatility, Haverty Furniture Companies is 1.3 times less risky than Aedas Homes. It trades about 0.04 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,635 in Aedas Homes SA on November 9, 2024 and sell it today you would earn a total of 325.00 from holding Aedas Homes SA or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haverty Furniture Companies vs. Aedas Homes SA
Performance |
| Timeline |
| Haverty Furniture |
| Aedas Homes SA |
Haverty Furniture and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haverty Furniture and Aedas Homes
The main advantage of trading using opposite Haverty Furniture and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Haverty Furniture vs. GOODYEAR T RUBBER | Haverty Furniture vs. Summit Materials | Haverty Furniture vs. Vulcan Materials | Haverty Furniture vs. Hua Hong Semiconductor |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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