Correlation Between First CommunityPFD and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both First CommunityPFD 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 First CommunityPFD and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community and Hooker Furniture, you can compare the effects of market volatilities on First CommunityPFD 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 First CommunityPFD with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of First CommunityPFD and Hooker Furniture.
Diversification Opportunities for First CommunityPFD and Hooker Furniture
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Hooker is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and First CommunityPFD 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 First Community 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 First CommunityPFD i.e., First CommunityPFD and Hooker Furniture go up and down completely randomly.
Pair Corralation between First CommunityPFD and Hooker Furniture
Assuming the 90 days horizon First CommunityPFD is expected to generate 1.6 times less return on investment than Hooker Furniture. But when comparing it to its historical volatility, First Community is 1.8 times less risky than Hooker Furniture. It trades about 0.03 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,529 in Hooker Furniture on August 26, 2024 and sell it today you would earn a total of 338.00 from holding Hooker Furniture or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.7% |
| Values | Daily Returns |
First Community vs. Hooker Furniture
Performance |
| Timeline |
| First CommunityPFD |
| Hooker Furniture |
First CommunityPFD and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First CommunityPFD and Hooker Furniture
The main advantage of trading using opposite First CommunityPFD and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First CommunityPFD 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.| First CommunityPFD vs. Hooker Furniture | First CommunityPFD vs. Canlan Ice Sports | First CommunityPFD vs. Mid Atlantic Home Health | First CommunityPFD vs. Dream Homes Development |
| Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture vs. First Business Financial |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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