Correlation Between HAVERTY FURNITURE and PLAYTECH
Can any of the company-specific risk be diversified away by investing in both HAVERTY FURNITURE and PLAYTECH 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 PLAYTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HAVERTY FURNITURE A and PLAYTECH, you can compare the effects of market volatilities on HAVERTY FURNITURE and PLAYTECH 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 PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of HAVERTY FURNITURE and PLAYTECH.
Diversification Opportunities for HAVERTY FURNITURE and PLAYTECH
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between HAVERTY and PLAYTECH is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding HAVERTY FURNITURE A and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH 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 A are associated (or correlated) with PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of HAVERTY FURNITURE i.e., HAVERTY FURNITURE and PLAYTECH go up and down completely randomly.
Pair Corralation between HAVERTY FURNITURE and PLAYTECH
Assuming the 90 days trading horizon HAVERTY FURNITURE A is expected to under-perform the PLAYTECH. But the stock apears to be less risky and, when comparing its historical volatility, HAVERTY FURNITURE A is 1.12 times less risky than PLAYTECH. The stock trades about -0.05 of its potential returns per unit of risk. The PLAYTECH is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 530.00 in PLAYTECH on November 21, 2024 and sell it today you would earn a total of 381.00 from holding PLAYTECH or generate 71.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
HAVERTY FURNITURE A vs. PLAYTECH
Performance |
Timeline |
HAVERTY FURNITURE |
PLAYTECH |
HAVERTY FURNITURE and PLAYTECH Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HAVERTY FURNITURE and PLAYTECH
The main advantage of trading using opposite HAVERTY FURNITURE and PLAYTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HAVERTY FURNITURE position performs unexpectedly, PLAYTECH 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 PLAYTECH will offset losses from the drop in PLAYTECH's long position.HAVERTY FURNITURE vs. Apple Inc | ||
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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