Correlation Between Lifetime Brands and MasterBrand
Can any of the company-specific risk be diversified away by investing in both Lifetime Brands and MasterBrand 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 MasterBrand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifetime Brands and MasterBrand, you can compare the effects of market volatilities on Lifetime Brands and MasterBrand 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 MasterBrand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifetime Brands and MasterBrand.
Diversification Opportunities for Lifetime Brands and MasterBrand
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lifetime and MasterBrand is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lifetime Brands and MasterBrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasterBrand 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 MasterBrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MasterBrand has no effect on the direction of Lifetime Brands i.e., Lifetime Brands and MasterBrand go up and down completely randomly.
Pair Corralation between Lifetime Brands and MasterBrand
Given the investment horizon of 90 days Lifetime Brands is expected to generate 1.25 times less return on investment than MasterBrand. In addition to that, Lifetime Brands is 1.69 times more volatile than MasterBrand. It trades about 0.03 of its total potential returns per unit of risk. MasterBrand is currently generating about 0.07 per unit of volatility. If you would invest 1,076 in MasterBrand on August 27, 2024 and sell it today you would earn a total of 643.00 from holding MasterBrand or generate 59.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifetime Brands vs. MasterBrand
Performance |
| Timeline |
| Lifetime Brands |
| MasterBrand |
Lifetime Brands and MasterBrand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifetime Brands and MasterBrand
The main advantage of trading using opposite Lifetime Brands and MasterBrand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifetime Brands position performs unexpectedly, MasterBrand 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 MasterBrand will offset losses from the drop in MasterBrand'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 |
| MasterBrand vs. Bassett Furniture Industries | MasterBrand vs. Ethan Allen Interiors | MasterBrand vs. Natuzzi SpA | MasterBrand 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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