Correlation Between Haverty Furniture and Motorcar Parts

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Can any of the company-specific risk be diversified away by investing in both Haverty Furniture and Motorcar Parts 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 Motorcar Parts 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 Motorcar Parts of, you can compare the effects of market volatilities on Haverty Furniture and Motorcar Parts 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 Motorcar Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haverty Furniture and Motorcar Parts.

Diversification Opportunities for Haverty Furniture and Motorcar Parts

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Haverty and Motorcar is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and Motorcar Parts of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motorcar Parts 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 Motorcar Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motorcar Parts has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and Motorcar Parts go up and down completely randomly.

Pair Corralation between Haverty Furniture and Motorcar Parts

Assuming the 90 days horizon Haverty Furniture Companies is expected to under-perform the Motorcar Parts. But the stock apears to be less risky and, when comparing its historical volatility, Haverty Furniture Companies is 1.78 times less risky than Motorcar Parts. The stock trades about 0.0 of its potential returns per unit of risk. The Motorcar Parts of is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,020  in Motorcar Parts of on September 12, 2024 and sell it today you would lose (280.00) from holding Motorcar Parts of or give up 27.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Haverty Furniture Companies  vs.  Motorcar Parts of

 Performance 
       Timeline  
Haverty Furniture 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Haverty Furniture is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Motorcar Parts 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Motorcar Parts of are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Motorcar Parts reported solid returns over the last few months and may actually be approaching a breakup point.

Haverty Furniture and Motorcar Parts Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Haverty Furniture and Motorcar Parts

The main advantage of trading using opposite Haverty Furniture and Motorcar Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture position performs unexpectedly, Motorcar Parts 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 Motorcar Parts will offset losses from the drop in Motorcar Parts' long position.
The idea behind Haverty Furniture Companies and Motorcar Parts of 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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