Correlation Between Flexsteel Industries and Eastern
Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries and Eastern 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 Flexsteel Industries and Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexsteel Industries and Eastern Co, you can compare the effects of market volatilities on Flexsteel Industries and Eastern 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 Flexsteel Industries with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and Eastern.
Diversification Opportunities for Flexsteel Industries and Eastern
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flexsteel and Eastern is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and Flexsteel Industries 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 Flexsteel Industries are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and Eastern go up and down completely randomly.
Pair Corralation between Flexsteel Industries and Eastern
Given the investment horizon of 90 days Flexsteel Industries is expected to generate 0.84 times more return on investment than Eastern. However, Flexsteel Industries is 1.19 times less risky than Eastern. It trades about 0.1 of its potential returns per unit of risk. Eastern Co is currently generating about -0.13 per unit of risk. If you would invest 5,700 in Flexsteel Industries on August 26, 2024 and sell it today you would earn a total of 271.00 from holding Flexsteel Industries or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexsteel Industries vs. Eastern Co
Performance |
| Timeline |
| Flexsteel Industries |
| Eastern |
Flexsteel Industries and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexsteel Industries and Eastern
The main advantage of trading using opposite Flexsteel Industries and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexsteel Industries position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Flexsteel Industries vs. Hooker Furniture | Flexsteel Industries vs. Bassett Furniture Industries | Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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