Correlation Between Ethan Allen and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Ethan Allen and Leggett Platt 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 Ethan Allen and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethan Allen Interiors and Leggett Platt Incorporated, you can compare the effects of market volatilities on Ethan Allen and Leggett Platt 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 Ethan Allen with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethan Allen and Leggett Platt.
Diversification Opportunities for Ethan Allen and Leggett Platt
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ethan and Leggett is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ethan Allen Interiors and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Ethan Allen 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 Ethan Allen Interiors are associated (or correlated) with Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Ethan Allen i.e., Ethan Allen and Leggett Platt go up and down completely randomly.
Pair Corralation between Ethan Allen and Leggett Platt
Considering the 90-day investment horizon Ethan Allen is expected to generate 1.02 times less return on investment than Leggett Platt. In addition to that, Ethan Allen is 1.1 times more volatile than Leggett Platt Incorporated. It trades about 0.27 of its total potential returns per unit of risk. Leggett Platt Incorporated is currently generating about 0.3 per unit of volatility. If you would invest 957.00 in Leggett Platt Incorporated on November 2, 2024 and sell it today you would earn a total of 137.00 from holding Leggett Platt Incorporated or generate 14.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethan Allen Interiors vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Ethan Allen Interiors |
| Leggett Platt |
Ethan Allen and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethan Allen and Leggett Platt
The main advantage of trading using opposite Ethan Allen and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethan Allen position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Ethan Allen vs. Bassett Furniture Industries | Ethan Allen vs. Natuzzi SpA | Ethan Allen vs. Flexsteel Industries | Ethan Allen vs. Hamilton Beach Brands |
| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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