Correlation Between Hooker Furniture and Virco Manufacturing
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Virco Manufacturing 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 Virco Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Virco Manufacturing, you can compare the effects of market volatilities on Hooker Furniture and Virco Manufacturing 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 Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Virco Manufacturing.
Diversification Opportunities for Hooker Furniture and Virco Manufacturing
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hooker and Virco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing 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 Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Virco Manufacturing go up and down completely randomly.
Pair Corralation between Hooker Furniture and Virco Manufacturing
Given the investment horizon of 90 days Hooker Furniture is expected to generate 4.51 times less return on investment than Virco Manufacturing. But when comparing it to its historical volatility, Hooker Furniture is 1.54 times less risky than Virco Manufacturing. It trades about 0.03 of its potential returns per unit of risk. Virco Manufacturing is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 424.00 in Virco Manufacturing on August 24, 2024 and sell it today you would earn a total of 1,187 from holding Virco Manufacturing or generate 279.95% 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. Virco Manufacturing
Performance |
| Timeline |
| Hooker Furniture |
| Virco Manufacturing |
Hooker Furniture and Virco Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Virco Manufacturing
The main advantage of trading using opposite Hooker Furniture and Virco Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Virco Manufacturing 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 Virco Manufacturing will offset losses from the drop in Virco Manufacturing'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 |
| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |