Correlation Between Hooker Furniture and JD Sports
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and JD Sports 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 JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and JD Sports Fashion, you can compare the effects of market volatilities on Hooker Furniture and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and JD Sports.
Diversification Opportunities for Hooker Furniture and JD Sports
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hooker and JDDSF is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and JD Sports go up and down completely randomly.
Pair Corralation between Hooker Furniture and JD Sports
Given the investment horizon of 90 days Hooker Furniture is expected to generate 0.85 times more return on investment than JD Sports. However, Hooker Furniture is 1.18 times less risky than JD Sports. It trades about 0.27 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.21 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. JD Sports Fashion
Performance |
| Timeline |
| Hooker Furniture |
| JD Sports Fashion |
Hooker Furniture and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and JD Sports
The main advantage of trading using opposite Hooker Furniture and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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