Correlation Between Flexsteel Industries and Johnson Outdoors
Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries and Johnson Outdoors 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 Johnson Outdoors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexsteel Industries and Johnson Outdoors, you can compare the effects of market volatilities on Flexsteel Industries and Johnson Outdoors 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 Johnson Outdoors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and Johnson Outdoors.
Diversification Opportunities for Flexsteel Industries and Johnson Outdoors
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flexsteel and Johnson is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Johnson Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Outdoors 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 Johnson Outdoors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Outdoors has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and Johnson Outdoors go up and down completely randomly.
Pair Corralation between Flexsteel Industries and Johnson Outdoors
Given the investment horizon of 90 days Flexsteel Industries is expected to generate 8.0 times less return on investment than Johnson Outdoors. In addition to that, Flexsteel Industries is 1.02 times more volatile than Johnson Outdoors. It trades about 0.01 of its total potential returns per unit of risk. Johnson Outdoors is currently generating about 0.06 per unit of volatility. If you would invest 3,247 in Johnson Outdoors on August 30, 2024 and sell it today you would earn a total of 82.00 from holding Johnson Outdoors or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexsteel Industries vs. Johnson Outdoors
Performance |
| Timeline |
| Flexsteel Industries |
| Johnson Outdoors |
Flexsteel Industries and Johnson Outdoors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexsteel Industries and Johnson Outdoors
The main advantage of trading using opposite Flexsteel Industries and Johnson Outdoors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexsteel Industries position performs unexpectedly, Johnson Outdoors 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 Johnson Outdoors will offset losses from the drop in Johnson Outdoors' long position.| Flexsteel Industries vs. Hooker Furniture | Flexsteel Industries vs. Bassett Furniture Industries | Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands |
| Johnson Outdoors vs. Vista Outdoor | Johnson Outdoors vs. Clarus Corp | Johnson Outdoors vs. Escalade Incorporated | Johnson Outdoors vs. JAKKS Pacific |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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