Correlation Between Hooker Furniture and Church Dwight
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Church Dwight 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 Hooker Furniture and Church Dwight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Church Dwight, you can compare the effects of market volatilities on Hooker Furniture and Church Dwight 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 Hooker Furniture with a short position of Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Church Dwight.
Diversification Opportunities for Hooker Furniture and Church Dwight
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hooker and Church is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Church Dwight go up and down completely randomly.
Pair Corralation between Hooker Furniture and Church Dwight
Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the Church Dwight. But the stock apears to be less risky and, when comparing its historical volatility, Hooker Furniture is 1.04 times less risky than Church Dwight. The stock trades about -0.19 of its potential returns per unit of risk. The Church Dwight is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,384 in Church Dwight on November 3, 2024 and sell it today you would earn a total of 168.00 from holding Church Dwight or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. Church Dwight
Performance |
| Timeline |
| Hooker Furniture |
| Church Dwight |
Hooker Furniture and Church Dwight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Church Dwight
The main advantage of trading using opposite Hooker Furniture and Church Dwight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Church Dwight 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 Church Dwight will offset losses from the drop in Church Dwight's long position.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
| Church Dwight vs. Kimberly Clark | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Procter Gamble |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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