Correlation Between Hooker Furniture and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Ross Stores, you can compare the effects of market volatilities on Hooker Furniture and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Ross Stores.
Diversification Opportunities for Hooker Furniture and Ross Stores
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hooker and Ross is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Ross Stores go up and down completely randomly.
Pair Corralation between Hooker Furniture and Ross Stores
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.92 times more return on investment than Ross Stores. However, Hooker Furniture is 1.92 times more volatile than Ross Stores. It trades about 0.14 of its potential returns per unit of risk. Ross Stores is currently generating about 0.25 per unit of risk. If you would invest 1,659 in Hooker Furniture on September 5, 2024 and sell it today you would earn a total of 160.00 from holding Hooker Furniture or generate 9.64% 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. Ross Stores
Performance |
| Timeline |
| Hooker Furniture |
| Ross Stores |
Hooker Furniture and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Ross Stores
The main advantage of trading using opposite Hooker Furniture and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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