Correlation Between FMC and Haverty Furniture
Can any of the company-specific risk be diversified away by investing in both FMC and Haverty 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 FMC and Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FMC Corporation and Haverty Furniture Companies, you can compare the effects of market volatilities on FMC and Haverty 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 FMC with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC and Haverty Furniture.
Diversification Opportunities for FMC and Haverty Furniture
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FMC and Haverty is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture and FMC 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 FMC Corporation are associated (or correlated) with Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of FMC i.e., FMC and Haverty Furniture go up and down completely randomly.
Pair Corralation between FMC and Haverty Furniture
Assuming the 90 days horizon FMC is expected to generate 1.09 times less return on investment than Haverty Furniture. But when comparing it to its historical volatility, FMC Corporation is 1.17 times less risky than Haverty Furniture. It trades about 0.11 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,109 in Haverty Furniture Companies on September 13, 2024 and sell it today you would earn a total of 91.00 from holding Haverty Furniture Companies or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FMC Corp. vs. Haverty Furniture Companies
Performance |
| Timeline |
| FMC Corporation |
| Haverty Furniture |
FMC and Haverty Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FMC and Haverty Furniture
The main advantage of trading using opposite FMC and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FMC position performs unexpectedly, Haverty 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 Haverty Furniture will offset losses from the drop in Haverty Furniture's long position.| FMC vs. PREMIER FOODS | FMC vs. SENECA FOODS A | FMC vs. Hyster Yale Materials Handling | FMC vs. Collins Foods Limited |
| Haverty Furniture vs. Lowes Companies | Haverty Furniture vs. Superior Plus Corp | Haverty Furniture vs. SIVERS SEMICONDUCTORS AB | Haverty Furniture vs. NorAm Drilling AS |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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