Correlation Between Hisense Home and La-Z-Boy Incorporated
Can any of the company-specific risk be diversified away by investing in both Hisense Home and La-Z-Boy Incorporated 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 Hisense Home and La-Z-Boy Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hisense Home Appliances and La Z Boy Incorporated, you can compare the effects of market volatilities on Hisense Home and La-Z-Boy Incorporated 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 Hisense Home with a short position of La-Z-Boy Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisense Home and La-Z-Boy Incorporated.
Diversification Opportunities for Hisense Home and La-Z-Boy Incorporated
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hisense and La-Z-Boy is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La-Z-Boy Incorporated and Hisense Home 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 Hisense Home Appliances are associated (or correlated) with La-Z-Boy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La-Z-Boy Incorporated has no effect on the direction of Hisense Home i.e., Hisense Home and La-Z-Boy Incorporated go up and down completely randomly.
Pair Corralation between Hisense Home and La-Z-Boy Incorporated
Assuming the 90 days horizon Hisense Home Appliances is expected to generate 2.15 times more return on investment than La-Z-Boy Incorporated. However, Hisense Home is 2.15 times more volatile than La Z Boy Incorporated. It trades about 0.07 of its potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.08 per unit of risk. If you would invest 164.00 in Hisense Home Appliances on September 15, 2024 and sell it today you would earn a total of 128.00 from holding Hisense Home Appliances or generate 78.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Hisense Home Appliances vs. La Z Boy Incorporated
Performance |
| Timeline |
| Hisense Home Appliances |
| La-Z-Boy Incorporated |
Hisense Home and La-Z-Boy Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hisense Home and La-Z-Boy Incorporated
The main advantage of trading using opposite Hisense Home and La-Z-Boy Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisense Home position performs unexpectedly, La-Z-Boy Incorporated 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 La-Z-Boy Incorporated will offset losses from the drop in La-Z-Boy Incorporated's long position.| Hisense Home vs. ELMOS SEMICONDUCTOR | Hisense Home vs. SALESFORCE INC CDR | Hisense Home vs. BE Semiconductor Industries | Hisense Home vs. Harmony Gold Mining |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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