Correlation Between Lifetime Brands and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Lifetime Brands and Leggett Platt 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 Lifetime Brands and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifetime Brands and Leggett Platt Incorporated, you can compare the effects of market volatilities on Lifetime Brands and Leggett Platt 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 Lifetime Brands with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifetime Brands and Leggett Platt.
Diversification Opportunities for Lifetime Brands and Leggett Platt
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lifetime and Leggett is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lifetime Brands and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Lifetime Brands 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 Lifetime Brands are associated (or correlated) with Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Lifetime Brands i.e., Lifetime Brands and Leggett Platt go up and down completely randomly.
Pair Corralation between Lifetime Brands and Leggett Platt
Given the investment horizon of 90 days Lifetime Brands is expected to generate 1.48 times more return on investment than Leggett Platt. However, Lifetime Brands is 1.48 times more volatile than Leggett Platt Incorporated. It trades about 0.01 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about -0.07 per unit of risk. If you would invest 755.00 in Lifetime Brands on October 21, 2024 and sell it today you would lose (143.00) from holding Lifetime Brands or give up 18.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifetime Brands vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Lifetime Brands |
| Leggett Platt |
Lifetime Brands and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifetime Brands and Leggett Platt
The main advantage of trading using opposite Lifetime Brands and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifetime Brands position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Lifetime Brands vs. Bassett Furniture Industries | Lifetime Brands vs. Flexsteel Industries | Lifetime Brands vs. Hamilton Beach Brands | Lifetime Brands vs. Natuzzi SpA |
| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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