Correlation Between DFS Furniture and Henderson High
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Henderson High 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 DFS Furniture and Henderson High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Henderson High Income, you can compare the effects of market volatilities on DFS Furniture and Henderson High 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 DFS Furniture with a short position of Henderson High. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Henderson High.
Diversification Opportunities for DFS Furniture and Henderson High
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DFS and Henderson is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Henderson High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson High Income and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Henderson High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson High Income has no effect on the direction of DFS Furniture i.e., DFS Furniture and Henderson High go up and down completely randomly.
Pair Corralation between DFS Furniture and Henderson High
Assuming the 90 days trading horizon DFS Furniture PLC is expected to under-perform the Henderson High. In addition to that, DFS Furniture is 2.14 times more volatile than Henderson High Income. It trades about -0.03 of its total potential returns per unit of risk. Henderson High Income is currently generating about 0.0 per unit of volatility. If you would invest 16,200 in Henderson High Income on October 25, 2024 and sell it today you would earn a total of 0.00 from holding Henderson High Income or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Henderson High Income
Performance |
| Timeline |
| DFS Furniture PLC |
| Henderson High Income |
DFS Furniture and Henderson High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Henderson High
The main advantage of trading using opposite DFS Furniture and Henderson High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Henderson High 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 Henderson High will offset losses from the drop in Henderson High's long position.| DFS Furniture vs. Samsung Electronics Co | DFS Furniture vs. Samsung Electronics Co | DFS Furniture vs. Toyota Motor Corp | DFS Furniture vs. Reliance Industries Ltd |
| Henderson High vs. DFS Furniture PLC | Henderson High vs. Taiwan Semiconductor Manufacturing | Henderson High vs. Coeur Mining | Henderson High vs. Beazer Homes USA |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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