Correlation Between Floor Decor and AutoCanada
Can any of the company-specific risk be diversified away by investing in both Floor Decor and AutoCanada 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 Floor Decor and AutoCanada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floor Decor Holdings and AutoCanada, you can compare the effects of market volatilities on Floor Decor and AutoCanada 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 Floor Decor with a short position of AutoCanada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floor Decor and AutoCanada.
Diversification Opportunities for Floor Decor and AutoCanada
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Floor and AutoCanada is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings and AutoCanada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoCanada and Floor Decor 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 Floor Decor Holdings are associated (or correlated) with AutoCanada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoCanada has no effect on the direction of Floor Decor i.e., Floor Decor and AutoCanada go up and down completely randomly.
Pair Corralation between Floor Decor and AutoCanada
Considering the 90-day investment horizon Floor Decor is expected to generate 4.74 times less return on investment than AutoCanada. In addition to that, Floor Decor is 1.56 times more volatile than AutoCanada. It trades about 0.04 of its total potential returns per unit of risk. AutoCanada is currently generating about 0.29 per unit of volatility. If you would invest 1,186 in AutoCanada on September 5, 2024 and sell it today you would earn a total of 143.00 from holding AutoCanada or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Floor Decor Holdings vs. AutoCanada
Performance |
| Timeline |
| Floor Decor Holdings |
| AutoCanada |
Floor Decor and AutoCanada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floor Decor and AutoCanada
The main advantage of trading using opposite Floor Decor and AutoCanada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floor Decor position performs unexpectedly, AutoCanada 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 AutoCanada will offset losses from the drop in AutoCanada's long position.| Floor Decor vs. Arhaus Inc | Floor Decor vs. Live Ventures | Floor Decor vs. Haverty Furniture Companies | Floor Decor vs. Haverty Furniture Companies |
| AutoCanada vs. Arhaus Inc | AutoCanada vs. Floor Decor Holdings | AutoCanada vs. Live Ventures | AutoCanada vs. Cisco Systems |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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