Correlation Between Hooker Furniture and Smith Douglas
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Smith Douglas 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 Smith Douglas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Smith Douglas Homes, you can compare the effects of market volatilities on Hooker Furniture and Smith Douglas 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 Smith Douglas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Smith Douglas.
Diversification Opportunities for Hooker Furniture and Smith Douglas
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hooker and Smith is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Smith Douglas Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Douglas Homes 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 Smith Douglas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Douglas Homes has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Smith Douglas go up and down completely randomly.
Pair Corralation between Hooker Furniture and Smith Douglas
Given the investment horizon of 90 days Hooker Furniture is expected to generate 0.92 times more return on investment than Smith Douglas. However, Hooker Furniture is 1.09 times less risky than Smith Douglas. It trades about 0.25 of its potential returns per unit of risk. Smith Douglas Homes is currently generating about -0.01 per unit of risk. If you would invest 1,578 in Hooker Furniture on August 25, 2024 and sell it today you would earn a total of 289.00 from holding Hooker Furniture or generate 18.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. Smith Douglas Homes
Performance |
| Timeline |
| Hooker Furniture |
| Smith Douglas Homes |
Hooker Furniture and Smith Douglas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Smith Douglas
The main advantage of trading using opposite Hooker Furniture and Smith Douglas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Smith Douglas 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 Smith Douglas will offset losses from the drop in Smith Douglas' long position.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
| Smith Douglas vs. CF Industries Holdings | Smith Douglas vs. Hudson Technologies | Smith Douglas vs. Ryanair Holdings PLC | Smith Douglas vs. Grupo Aeroportuario del |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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