Correlation Between Flexsteel Industries and El Pollo
Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries and El Pollo 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 El Pollo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexsteel Industries and El Pollo Loco, you can compare the effects of market volatilities on Flexsteel Industries and El Pollo 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 El Pollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and El Pollo.
Diversification Opportunities for Flexsteel Industries and El Pollo
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Flexsteel and LOCO is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and El Pollo Loco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Pollo Loco 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 El Pollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Pollo Loco has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and El Pollo go up and down completely randomly.
Pair Corralation between Flexsteel Industries and El Pollo
Given the investment horizon of 90 days Flexsteel Industries is expected to generate 1.68 times more return on investment than El Pollo. However, Flexsteel Industries is 1.68 times more volatile than El Pollo Loco. It trades about 0.1 of its potential returns per unit of risk. El Pollo Loco is currently generating about 0.03 per unit of risk. If you would invest 1,399 in Flexsteel Industries on August 30, 2024 and sell it today you would earn a total of 4,518 from holding Flexsteel Industries or generate 322.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexsteel Industries vs. El Pollo Loco
Performance |
| Timeline |
| Flexsteel Industries |
| El Pollo Loco |
Flexsteel Industries and El Pollo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexsteel Industries and El Pollo
The main advantage of trading using opposite Flexsteel Industries and El Pollo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexsteel Industries position performs unexpectedly, El Pollo 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 El Pollo will offset losses from the drop in El Pollo'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 |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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