Correlation Between Crown Crafts and Mohawk Industries
Can any of the company-specific risk be diversified away by investing in both Crown Crafts and Mohawk Industries 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 Mohawk Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Crafts and Mohawk Industries, you can compare the effects of market volatilities on Crown Crafts and Mohawk Industries 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 Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Crafts and Mohawk Industries.
Diversification Opportunities for Crown Crafts and Mohawk Industries
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crown and Mohawk is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Crown Crafts and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk Industries 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 Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of Crown Crafts i.e., Crown Crafts and Mohawk Industries go up and down completely randomly.
Pair Corralation between Crown Crafts and Mohawk Industries
Given the investment horizon of 90 days Crown Crafts is expected to generate 25.29 times less return on investment than Mohawk Industries. But when comparing it to its historical volatility, Crown Crafts is 1.59 times less risky than Mohawk Industries. It trades about 0.0 of its potential returns per unit of risk. Mohawk Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,800 in Mohawk Industries on August 31, 2024 and sell it today you would earn a total of 4,083 from holding Mohawk Industries or generate 41.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Crafts vs. Mohawk Industries
Performance |
| Timeline |
| Crown Crafts |
| Mohawk Industries |
Crown Crafts and Mohawk Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Crafts and Mohawk Industries
The main advantage of trading using opposite Crown Crafts and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Crafts position performs unexpectedly, Mohawk Industries 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.| Crown Crafts vs. Bassett Furniture Industries | Crown Crafts vs. Hooker Furniture | Crown Crafts vs. Natuzzi SpA | Crown Crafts vs. Flexsteel Industries |
| Mohawk Industries vs. Bassett Furniture Industries | Mohawk Industries vs. Ethan Allen Interiors | Mohawk Industries vs. Natuzzi SpA | Mohawk Industries vs. Flexsteel Industries |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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