Correlation Between Crown Crafts and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Crown Crafts and Leggett Platt 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 Crown Crafts and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Crafts and Leggett Platt Incorporated, you can compare the effects of market volatilities on Crown Crafts and Leggett Platt 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 Crown Crafts with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Crafts and Leggett Platt.
Diversification Opportunities for Crown Crafts and Leggett Platt
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crown and Leggett is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Crown Crafts and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Crown Crafts 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 Crown Crafts are associated (or correlated) with Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Crown Crafts i.e., Crown Crafts and Leggett Platt go up and down completely randomly.
Pair Corralation between Crown Crafts and Leggett Platt
Given the investment horizon of 90 days Crown Crafts is expected to under-perform the Leggett Platt. But the stock apears to be less risky and, when comparing its historical volatility, Crown Crafts is 2.61 times less risky than Leggett Platt. The stock trades about -0.11 of its potential returns per unit of risk. The Leggett Platt Incorporated is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,217 in Leggett Platt Incorporated on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Leggett Platt Incorporated or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Crown Crafts vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Crown Crafts |
| Leggett Platt |
Crown Crafts and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Crafts and Leggett Platt
The main advantage of trading using opposite Crown Crafts and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Crafts position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Crown Crafts vs. Bassett Furniture Industries | Crown Crafts vs. Hooker Furniture | Crown Crafts vs. Natuzzi SpA | Crown Crafts vs. Flexsteel Industries |
| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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