Correlation Between Hooker Furniture and Universal Music
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Universal Music 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 Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Universal Music Group, you can compare the effects of market volatilities on Hooker Furniture and Universal Music 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 Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Universal Music.
Diversification Opportunities for Hooker Furniture and Universal Music
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hooker and Universal is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Universal Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Music Group 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 Universal Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Music Group has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Universal Music go up and down completely randomly.
Pair Corralation between Hooker Furniture and Universal Music
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.54 times more return on investment than Universal Music. However, Hooker Furniture is 1.54 times more volatile than Universal Music Group. It trades about 0.12 of its potential returns per unit of risk. Universal Music Group is currently generating about -0.05 per unit of risk. If you would invest 1,509 in Hooker Furniture on August 31, 2024 and sell it today you would earn a total of 354.00 from holding Hooker Furniture or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. Universal Music Group
Performance |
| Timeline |
| Hooker Furniture |
| Universal Music Group |
Hooker Furniture and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Universal Music
The main advantage of trading using opposite Hooker Furniture and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Universal Music 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 Universal Music will offset losses from the drop in Universal Music'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 |
| Universal Music vs. Guild Esports Plc | Universal Music vs. ZoomerMedia Limited | Universal Music vs. Celtic plc | Universal Music vs. Network Media Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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