Correlation Between Hooker Furniture and Weyco
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Weyco 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 Weyco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Weyco Group, you can compare the effects of market volatilities on Hooker Furniture and Weyco 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 Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Weyco.
Diversification Opportunities for Hooker Furniture and Weyco
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hooker and Weyco is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco 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 Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Weyco go up and down completely randomly.
Pair Corralation between Hooker Furniture and Weyco
Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the Weyco. In addition to that, Hooker Furniture is 1.07 times more volatile than Weyco Group. It trades about -0.19 of its total potential returns per unit of risk. Weyco Group is currently generating about -0.02 per unit of volatility. If you would invest 3,674 in Weyco Group on November 3, 2024 and sell it today you would lose (27.47) from holding Weyco Group or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. Weyco Group
Performance |
| Timeline |
| Hooker Furniture |
| Weyco Group |
Hooker Furniture and Weyco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Weyco
The main advantage of trading using opposite Hooker Furniture and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Weyco 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 Weyco will offset losses from the drop in Weyco'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 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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