Correlation Between Leggett Platt and Arhaus
Can any of the company-specific risk be diversified away by investing in both Leggett Platt and Arhaus 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 Leggett Platt and Arhaus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leggett Platt Incorporated and Arhaus Inc, you can compare the effects of market volatilities on Leggett Platt and Arhaus 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 Leggett Platt with a short position of Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggett Platt and Arhaus.
Diversification Opportunities for Leggett Platt and Arhaus
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leggett and Arhaus is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Leggett Platt 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 Leggett Platt Incorporated are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Leggett Platt i.e., Leggett Platt and Arhaus go up and down completely randomly.
Pair Corralation between Leggett Platt and Arhaus
Considering the 90-day investment horizon Leggett Platt Incorporated is expected to under-perform the Arhaus. But the stock apears to be less risky and, when comparing its historical volatility, Leggett Platt Incorporated is 1.65 times less risky than Arhaus. The stock trades about -0.27 of its potential returns per unit of risk. The Arhaus Inc is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,241 in Arhaus Inc on November 28, 2024 and sell it today you would lose (146.00) from holding Arhaus Inc or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggett Platt Incorporated vs. Arhaus Inc
Performance |
| Timeline |
| Leggett Platt |
| Arhaus Inc |
Leggett Platt and Arhaus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggett Platt and Arhaus
The main advantage of trading using opposite Leggett Platt and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggett Platt position performs unexpectedly, Arhaus 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 Arhaus will offset losses from the drop in Arhaus' long position.| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac | Leggett Platt vs. La Z Boy Incorporated |
| Arhaus vs. Floor Decor Holdings | Arhaus vs. Live Ventures | Arhaus vs. Haverty Furniture Companies | Arhaus vs. Haverty Furniture Companies |
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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