Correlation Between Employers Holdings and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Employers Holdings 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 Employers Holdings and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Hooker Furniture, you can compare the effects of market volatilities on Employers Holdings 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 Employers Holdings with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Hooker Furniture.
Diversification Opportunities for Employers Holdings and Hooker Furniture
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Employers and Hooker is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Employers Holdings 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 Employers Holdings 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 Employers Holdings i.e., Employers Holdings and Hooker Furniture go up and down completely randomly.
Pair Corralation between Employers Holdings and Hooker Furniture
Considering the 90-day investment horizon Employers Holdings is expected to generate 0.47 times more return on investment than Hooker Furniture. However, Employers Holdings is 2.13 times less risky than Hooker Furniture. It trades about 0.04 of its potential returns per unit of risk. Hooker Furniture is currently generating about -0.01 per unit of risk. If you would invest 4,047 in Employers Holdings on November 28, 2024 and sell it today you would earn a total of 1,008 from holding Employers Holdings or generate 24.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. Hooker Furniture
Performance |
| Timeline |
| Employers Holdings |
| Hooker Furniture |
Employers Holdings and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Hooker Furniture
The main advantage of trading using opposite Employers Holdings and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings 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.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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