Correlation Between Hamilton Beach and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Hamilton Beach and Leggett Platt 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 Hamilton Beach and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hamilton Beach Brands and Leggett Platt Incorporated, you can compare the effects of market volatilities on Hamilton Beach and Leggett Platt 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 Hamilton Beach with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Beach and Leggett Platt.
Diversification Opportunities for Hamilton Beach and Leggett Platt
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hamilton and Leggett is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Beach Brands and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Hamilton Beach 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 Hamilton Beach Brands are associated (or correlated) with Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Hamilton Beach i.e., Hamilton Beach and Leggett Platt go up and down completely randomly.
Pair Corralation between Hamilton Beach and Leggett Platt
Considering the 90-day investment horizon Hamilton Beach is expected to generate 1.36 times less return on investment than Leggett Platt. But when comparing it to its historical volatility, Hamilton Beach Brands is 1.05 times less risky than Leggett Platt. It trades about 0.23 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 957.00 in Leggett Platt Incorporated on November 2, 2024 and sell it today you would earn a total of 137.00 from holding Leggett Platt Incorporated or generate 14.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hamilton Beach Brands vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Hamilton Beach Brands |
| Leggett Platt |
Hamilton Beach and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Beach and Leggett Platt
The main advantage of trading using opposite Hamilton Beach and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Beach position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Hamilton Beach vs. Bassett Furniture Industries | Hamilton Beach vs. Flexsteel Industries | Hamilton Beach vs. Natuzzi SpA | Hamilton Beach vs. La Z Boy Incorporated |
| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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