Correlation Between ROMERIKE SPAREBANK and La-Z-Boy Incorporated
Can any of the company-specific risk be diversified away by investing in both ROMERIKE SPAREBANK and La-Z-Boy Incorporated 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 ROMERIKE SPAREBANK and La-Z-Boy Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROMERIKE SPAREBANK NK and La Z Boy Incorporated, you can compare the effects of market volatilities on ROMERIKE SPAREBANK and La-Z-Boy Incorporated 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 ROMERIKE SPAREBANK with a short position of La-Z-Boy Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROMERIKE SPAREBANK and La-Z-Boy Incorporated.
Diversification Opportunities for ROMERIKE SPAREBANK and La-Z-Boy Incorporated
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ROMERIKE and La-Z-Boy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ROMERIKE SPAREBANK NK and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La-Z-Boy Incorporated and ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK NK are associated (or correlated) with La-Z-Boy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La-Z-Boy Incorporated has no effect on the direction of ROMERIKE SPAREBANK i.e., ROMERIKE SPAREBANK and La-Z-Boy Incorporated go up and down completely randomly.
Pair Corralation between ROMERIKE SPAREBANK and La-Z-Boy Incorporated
Assuming the 90 days horizon ROMERIKE SPAREBANK NK is expected to generate 17.35 times more return on investment than La-Z-Boy Incorporated. However, ROMERIKE SPAREBANK is 17.35 times more volatile than La Z Boy Incorporated. It trades about 0.05 of its potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.08 per unit of risk. If you would invest 1,004 in ROMERIKE SPAREBANK NK on September 15, 2024 and sell it today you would earn a total of 72.00 from holding ROMERIKE SPAREBANK NK or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.27% |
| Values | Daily Returns |
ROMERIKE SPAREBANK NK vs. La Z Boy Incorporated
Performance |
| Timeline |
| ROMERIKE SPAREBANK |
| La-Z-Boy Incorporated |
ROMERIKE SPAREBANK and La-Z-Boy Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROMERIKE SPAREBANK and La-Z-Boy Incorporated
The main advantage of trading using opposite ROMERIKE SPAREBANK and La-Z-Boy Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROMERIKE SPAREBANK position performs unexpectedly, La-Z-Boy Incorporated 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 La-Z-Boy Incorporated will offset losses from the drop in La-Z-Boy Incorporated's long position.| ROMERIKE SPAREBANK vs. POSBO UNSPADRS20YC1 | ROMERIKE SPAREBANK vs. Postal Savings Bank | ROMERIKE SPAREBANK vs. UTD OV BK LOC ADR1 | ROMERIKE SPAREBANK vs. Superior Plus Corp |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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