Correlation Between Flexsteel Industries and MasterBrand
Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries and MasterBrand 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 MasterBrand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexsteel Industries and MasterBrand, you can compare the effects of market volatilities on Flexsteel Industries and MasterBrand 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 MasterBrand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and MasterBrand.
Diversification Opportunities for Flexsteel Industries and MasterBrand
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Flexsteel and MasterBrand is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and MasterBrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasterBrand 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 MasterBrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MasterBrand has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and MasterBrand go up and down completely randomly.
Pair Corralation between Flexsteel Industries and MasterBrand
Given the investment horizon of 90 days Flexsteel Industries is expected to generate 1.02 times more return on investment than MasterBrand. However, Flexsteel Industries is 1.02 times more volatile than MasterBrand. It trades about 0.06 of its potential returns per unit of risk. MasterBrand is currently generating about -0.06 per unit of risk. If you would invest 5,802 in Flexsteel Industries on August 28, 2024 and sell it today you would earn a total of 135.00 from holding Flexsteel Industries or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexsteel Industries vs. MasterBrand
Performance |
| Timeline |
| Flexsteel Industries |
| MasterBrand |
Flexsteel Industries and MasterBrand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexsteel Industries and MasterBrand
The main advantage of trading using opposite Flexsteel Industries and MasterBrand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexsteel Industries position performs unexpectedly, MasterBrand 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 MasterBrand will offset losses from the drop in MasterBrand's long position.| Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands | Flexsteel Industries vs. First Business Financial |
| MasterBrand vs. Bassett Furniture Industries | MasterBrand vs. Ethan Allen Interiors | MasterBrand vs. Natuzzi SpA | MasterBrand vs. Flexsteel Industries |
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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