Correlation Between Hooker Furniture and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Plexus Corp 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 Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Plexus Corp, you can compare the effects of market volatilities on Hooker Furniture and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Plexus Corp.
Diversification Opportunities for Hooker Furniture and Plexus Corp
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hooker and Plexus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Plexus Corp go up and down completely randomly.
Pair Corralation between Hooker Furniture and Plexus Corp
Given the investment horizon of 90 days Hooker Furniture is expected to generate 2.41 times less return on investment than Plexus Corp. In addition to that, Hooker Furniture is 1.41 times more volatile than Plexus Corp. It trades about 0.06 of its total potential returns per unit of risk. Plexus Corp is currently generating about 0.21 per unit of volatility. If you would invest 13,793 in Plexus Corp on September 13, 2024 and sell it today you would earn a total of 2,869 from holding Plexus Corp or generate 20.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Hooker Furniture vs. Plexus Corp
Performance |
| Timeline |
| Hooker Furniture |
| Plexus Corp |
Hooker Furniture and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Plexus Corp
The main advantage of trading using opposite Hooker Furniture and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp'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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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