Correlation Between Leggett Platt and Lovesac
Can any of the company-specific risk be diversified away by investing in both Leggett Platt and Lovesac 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 Lovesac 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 The Lovesac, you can compare the effects of market volatilities on Leggett Platt and Lovesac 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 Lovesac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggett Platt and Lovesac.
Diversification Opportunities for Leggett Platt and Lovesac
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leggett and Lovesac is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and The Lovesac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lovesac 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 Lovesac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lovesac has no effect on the direction of Leggett Platt i.e., Leggett Platt and Lovesac go up and down completely randomly.
Pair Corralation between Leggett Platt and Lovesac
Considering the 90-day investment horizon Leggett Platt is expected to generate 4.83 times less return on investment than Lovesac. But when comparing it to its historical volatility, Leggett Platt Incorporated is 1.11 times less risky than Lovesac. It trades about 0.07 of its potential returns per unit of risk. The Lovesac is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,002 in The Lovesac on August 31, 2024 and sell it today you would earn a total of 704.00 from holding The Lovesac or generate 23.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggett Platt Incorporated vs. The Lovesac
Performance |
| Timeline |
| Leggett Platt |
| Lovesac |
Leggett Platt and Lovesac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggett Platt and Lovesac
The main advantage of trading using opposite Leggett Platt and Lovesac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggett Platt position performs unexpectedly, Lovesac 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 Lovesac will offset losses from the drop in Lovesac's long position.| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
| Lovesac vs. Tempur Sealy International | Lovesac vs. La Z Boy Incorporated | Lovesac vs. Purple Innovation | Lovesac vs. MasterBrand |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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