Correlation Between Lifetime Brands and La Z
Can any of the company-specific risk be diversified away by investing in both Lifetime Brands and La Z 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 La Z into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifetime Brands and La Z Boy Incorporated, you can compare the effects of market volatilities on Lifetime Brands and La Z 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 La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifetime Brands and La Z.
Diversification Opportunities for Lifetime Brands and La Z
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lifetime and LZB is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lifetime Brands and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Z Boy 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 La Z. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Z Boy has no effect on the direction of Lifetime Brands i.e., Lifetime Brands and La Z go up and down completely randomly.
Pair Corralation between Lifetime Brands and La Z
Given the investment horizon of 90 days Lifetime Brands is expected to generate 1.22 times less return on investment than La Z. In addition to that, Lifetime Brands is 1.78 times more volatile than La Z Boy Incorporated. It trades about 0.03 of its total potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.07 per unit of volatility. If you would invest 2,796 in La Z Boy Incorporated on August 31, 2024 and sell it today you would earn a total of 1,731 from holding La Z Boy Incorporated or generate 61.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifetime Brands vs. La Z Boy Incorporated
Performance |
| Timeline |
| Lifetime Brands |
| La Z Boy |
Lifetime Brands and La Z Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifetime Brands and La Z
The main advantage of trading using opposite Lifetime Brands and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifetime Brands position performs unexpectedly, La Z 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 La Z will offset losses from the drop in La Z's long position.| Lifetime Brands vs. Fundamental Global | Lifetime Brands vs. Yoshitsu Co Ltd | Lifetime Brands vs. Hour Loop | Lifetime Brands vs. Direct Digital Holdings |
| La Z vs. Energy Focu | La Z vs. Flexsteel Industries | La Z vs. FGI Industries | La Z 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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