Correlation Between Hooker Furniture and Flexsteel Industries
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Flexsteel Industries 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 Flexsteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Flexsteel Industries, you can compare the effects of market volatilities on Hooker Furniture and Flexsteel Industries 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 Flexsteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Flexsteel Industries.
Diversification Opportunities for Hooker Furniture and Flexsteel Industries
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hooker and Flexsteel is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries 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 Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Flexsteel Industries go up and down completely randomly.
Pair Corralation between Hooker Furniture and Flexsteel Industries
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.45 times more return on investment than Flexsteel Industries. However, Hooker Furniture is 1.45 times more volatile than Flexsteel Industries. It trades about 0.27 of its potential returns per unit of risk. Flexsteel Industries is currently generating about 0.06 per unit of risk. If you would invest 1,605 in Hooker Furniture on August 28, 2024 and sell it today you would earn a total of 306.00 from holding Hooker Furniture or generate 19.07% 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. Flexsteel Industries
Performance |
| Timeline |
| Hooker Furniture |
| Flexsteel Industries |
Hooker Furniture and Flexsteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Flexsteel Industries
The main advantage of trading using opposite Hooker Furniture and Flexsteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Flexsteel Industries 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 Flexsteel Industries will offset losses from the drop in Flexsteel Industries' long position.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
| Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands | Flexsteel Industries vs. First Business Financial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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