Correlation Between Hooker Furniture and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Tower Semiconductor 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 Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Tower Semiconductor, you can compare the effects of market volatilities on Hooker Furniture and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Tower Semiconductor.
Diversification Opportunities for Hooker Furniture and Tower Semiconductor
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hooker and Tower is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Hooker Furniture and Tower Semiconductor
Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the Tower Semiconductor. In addition to that, Hooker Furniture is 1.29 times more volatile than Tower Semiconductor. It trades about -0.02 of its total potential returns per unit of risk. Tower Semiconductor is currently generating about 0.11 per unit of volatility. If you would invest 2,909 in Tower Semiconductor on September 4, 2024 and sell it today you would earn a total of 1,986 from holding Tower Semiconductor or generate 68.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. Tower Semiconductor
Performance |
| Timeline |
| Hooker Furniture |
| Tower Semiconductor |
Hooker Furniture and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Tower Semiconductor
The main advantage of trading using opposite Hooker Furniture and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor'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 |
| Tower Semiconductor vs. Nova | Tower Semiconductor vs. AudioCodes | Tower Semiconductor vs. Nice Ltd ADR | Tower Semiconductor vs. Elbit Systems |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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