Correlation Between Hooker Furniture and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and ServiceNow 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 ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and ServiceNow, you can compare the effects of market volatilities on Hooker Furniture and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and ServiceNow.
Diversification Opportunities for Hooker Furniture and ServiceNow
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hooker and ServiceNow is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and ServiceNow go up and down completely randomly.
Pair Corralation between Hooker Furniture and ServiceNow
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.85 times more return on investment than ServiceNow. However, Hooker Furniture is 1.85 times more volatile than ServiceNow. It trades about 0.22 of its potential returns per unit of risk. ServiceNow is currently generating about 0.33 per unit of risk. If you would invest 1,621 in Hooker Furniture on August 23, 2024 and sell it today you would earn a total of 269.00 from holding Hooker Furniture or generate 16.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. ServiceNow
Performance |
| Timeline |
| Hooker Furniture |
| ServiceNow |
Hooker Furniture and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and ServiceNow
The main advantage of trading using opposite Hooker Furniture and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow'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 |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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