Correlation Between Hooker Furniture and United Parks
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and United Parks Resorts, you can compare the effects of market volatilities on Hooker Furniture and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and United Parks.
Diversification Opportunities for Hooker Furniture and United Parks
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hooker and United is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and United Parks go up and down completely randomly.
Pair Corralation between Hooker Furniture and United Parks
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.15 times more return on investment than United Parks. However, Hooker Furniture is 1.15 times more volatile than United Parks Resorts. It trades about -0.08 of its potential returns per unit of risk. United Parks Resorts is currently generating about -0.15 per unit of risk. If you would invest 1,382 in Hooker Furniture on October 25, 2024 and sell it today you would lose (44.00) from holding Hooker Furniture or give up 3.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. United Parks Resorts
Performance |
| Timeline |
| Hooker Furniture |
| United Parks Resorts |
Hooker Furniture and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and United Parks
The main advantage of trading using opposite Hooker Furniture and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
| United Parks vs. Hooker Furniture | United Parks vs. JBG SMITH Properties | United Parks vs. Everspin Technologies | United Parks vs. STMicroelectronics NV ADR |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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