Correlation Between Aterian and La Z
Can any of the company-specific risk be diversified away by investing in both Aterian and La Z 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 Aterian and La Z into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aterian and La Z Boy Incorporated, you can compare the effects of market volatilities on Aterian and La Z 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 Aterian with a short position of La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aterian and La Z.
Diversification Opportunities for Aterian and La Z
Excellent diversification
The 3 months correlation between Aterian and LZB is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aterian 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 and Aterian 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 Aterian are associated (or correlated) with La Z. 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 has no effect on the direction of Aterian i.e., Aterian and La Z go up and down completely randomly.
Pair Corralation between Aterian and La Z
Given the investment horizon of 90 days Aterian is expected to under-perform the La Z. In addition to that, Aterian is 3.31 times more volatile than La Z Boy Incorporated. It trades about -0.07 of its total potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.12 per unit of volatility. If you would invest 4,390 in La Z Boy Incorporated on October 25, 2024 and sell it today you would earn a total of 98.00 from holding La Z Boy Incorporated or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aterian vs. La Z Boy Incorporated
Performance |
| Timeline |
| Aterian |
| La Z Boy |
Aterian and La Z Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aterian and La Z
The main advantage of trading using opposite Aterian and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aterian position performs unexpectedly, La Z 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 will offset losses from the drop in La Z's long position.The idea behind Aterian and La Z Boy Incorporated 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.| La Z vs. Flexsteel Industries | La Z vs. Crown Crafts | La Z vs. Bassett Furniture Industries | La Z vs. Hamilton Beach Brands |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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