Correlation Between Floor Decor and Kirklands
Can any of the company-specific risk be diversified away by investing in both Floor Decor and Kirklands 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 Kirklands 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 Kirklands, you can compare the effects of market volatilities on Floor Decor and Kirklands 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 Kirklands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floor Decor and Kirklands.
Diversification Opportunities for Floor Decor and Kirklands
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Floor and Kirklands is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings and Kirklands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirklands 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 Kirklands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirklands has no effect on the direction of Floor Decor i.e., Floor Decor and Kirklands go up and down completely randomly.
Pair Corralation between Floor Decor and Kirklands
Considering the 90-day investment horizon Floor Decor Holdings is expected to generate 0.87 times more return on investment than Kirklands. However, Floor Decor Holdings is 1.15 times less risky than Kirklands. It trades about 0.18 of its potential returns per unit of risk. Kirklands is currently generating about -0.09 per unit of risk. If you would invest 10,184 in Floor Decor Holdings on August 28, 2024 and sell it today you would earn a total of 1,291 from holding Floor Decor Holdings or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floor Decor Holdings vs. Kirklands
Performance |
| Timeline |
| Floor Decor Holdings |
| Kirklands |
Floor Decor and Kirklands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floor Decor and Kirklands
The main advantage of trading using opposite Floor Decor and Kirklands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floor Decor position performs unexpectedly, Kirklands 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 Kirklands will offset losses from the drop in Kirklands' long position.| Floor Decor vs. Arhaus Inc | Floor Decor vs. Haverty Furniture Companies | Floor Decor vs. Kirklands | Floor Decor vs. Haverty Furniture Companies |
| Kirklands vs. Floor Decor Holdings | Kirklands vs. Haverty Furniture Companies | Kirklands vs. Tile Shop Holdings | Kirklands vs. Arhaus Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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