Correlation Between Crown Crafts and La Z
Can any of the company-specific risk be diversified away by investing in both Crown Crafts 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 Crown Crafts and La Z into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Crafts and La Z Boy Incorporated, you can compare the effects of market volatilities on Crown Crafts 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 Crown Crafts with a short position of La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Crafts and La Z.
Diversification Opportunities for Crown Crafts and La Z
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Crown and LZB is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Crown Crafts 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 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 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 Crown Crafts i.e., Crown Crafts and La Z go up and down completely randomly.
Pair Corralation between Crown Crafts and La Z
Given the investment horizon of 90 days Crown Crafts is expected to generate 17.48 times less return on investment than La Z. But when comparing it to its historical volatility, Crown Crafts is 1.49 times less risky than La Z. It trades about 0.01 of its potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,690 in La Z Boy Incorporated on August 28, 2024 and sell it today you would earn a total of 1,887 from holding La Z Boy Incorporated or generate 70.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Crafts vs. La Z Boy Incorporated
Performance |
| Timeline |
| Crown Crafts |
| La Z Boy |
Crown Crafts and La Z Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Crafts and La Z
The main advantage of trading using opposite Crown Crafts and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Crafts 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.| Crown Crafts vs. Bassett Furniture Industries | Crown Crafts vs. Hooker Furniture | Crown Crafts vs. Natuzzi SpA | Crown Crafts vs. Flexsteel Industries |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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