Correlation Between Catalent and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Catalent and Hooker Furniture 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 Catalent and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Hooker Furniture, you can compare the effects of market volatilities on Catalent and Hooker Furniture 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 Catalent with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Hooker Furniture.
Diversification Opportunities for Catalent and Hooker Furniture
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Catalent and Hooker is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Catalent 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 Catalent are associated (or correlated) with Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Catalent i.e., Catalent and Hooker Furniture go up and down completely randomly.
Pair Corralation between Catalent and Hooker Furniture
Given the investment horizon of 90 days Catalent is expected to generate 1.15 times more return on investment than Hooker Furniture. However, Catalent is 1.15 times more volatile than Hooker Furniture. It trades about 0.03 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.03 per unit of risk. If you would invest 4,678 in Catalent on September 3, 2024 and sell it today you would earn a total of 1,433 from holding Catalent or generate 30.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalent vs. Hooker Furniture
Performance |
| Timeline |
| Catalent |
| Hooker Furniture |
Catalent and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Hooker Furniture
The main advantage of trading using opposite Catalent and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.| Catalent vs. IQVIA Holdings | Catalent vs. West Pharmaceutical Services | Catalent vs. Charles River Laboratories | Catalent vs. Bio Rad Laboratories |
| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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