Correlation Between Arhaus and Floor Decor
Can any of the company-specific risk be diversified away by investing in both Arhaus and Floor Decor 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 Arhaus and Floor Decor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arhaus Inc and Floor Decor Holdings, you can compare the effects of market volatilities on Arhaus and Floor Decor 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 Arhaus with a short position of Floor Decor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and Floor Decor.
Diversification Opportunities for Arhaus and Floor Decor
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arhaus and Floor is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Floor Decor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floor Decor Holdings and Arhaus 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 Arhaus Inc are associated (or correlated) with Floor Decor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floor Decor Holdings has no effect on the direction of Arhaus i.e., Arhaus and Floor Decor go up and down completely randomly.
Pair Corralation between Arhaus and Floor Decor
Given the investment horizon of 90 days Arhaus Inc is expected to generate 0.98 times more return on investment than Floor Decor. However, Arhaus Inc is 1.02 times less risky than Floor Decor. It trades about 0.33 of its potential returns per unit of risk. Floor Decor Holdings is currently generating about 0.26 per unit of risk. If you would invest 874.00 in Arhaus Inc on August 28, 2024 and sell it today you would earn a total of 193.00 from holding Arhaus Inc or generate 22.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arhaus Inc vs. Floor Decor Holdings
Performance |
| Timeline |
| Arhaus Inc |
| Floor Decor Holdings |
Arhaus and Floor Decor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arhaus and Floor Decor
The main advantage of trading using opposite Arhaus and Floor Decor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus position performs unexpectedly, Floor Decor 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 Floor Decor will offset losses from the drop in Floor Decor's long position.| Arhaus vs. Floor Decor Holdings | Arhaus vs. Live Ventures | Arhaus vs. Haverty Furniture Companies | Arhaus vs. Home Depot |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |