Correlation Between LL Flooring and Kingfisher Plc
Can any of the company-specific risk be diversified away by investing in both LL Flooring and Kingfisher Plc 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 LL Flooring and Kingfisher Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LL Flooring Holdings and Kingfisher plc, you can compare the effects of market volatilities on LL Flooring and Kingfisher Plc 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 LL Flooring with a short position of Kingfisher Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of LL Flooring and Kingfisher Plc.
Diversification Opportunities for LL Flooring and Kingfisher Plc
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LL Flooring and Kingfisher is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding LL Flooring Holdings and Kingfisher plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher plc and LL Flooring 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 LL Flooring Holdings are associated (or correlated) with Kingfisher Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher plc has no effect on the direction of LL Flooring i.e., LL Flooring and Kingfisher Plc go up and down completely randomly.
Pair Corralation between LL Flooring and Kingfisher Plc
Allowing for the 90-day total investment horizon LL Flooring Holdings is expected to under-perform the Kingfisher Plc. In addition to that, LL Flooring is 2.4 times more volatile than Kingfisher plc. It trades about -0.1 of its total potential returns per unit of risk. Kingfisher plc is currently generating about 0.03 per unit of volatility. If you would invest 292.00 in Kingfisher plc on August 31, 2024 and sell it today you would earn a total of 23.00 from holding Kingfisher plc or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.58% |
| Values | Daily Returns |
LL Flooring Holdings vs. Kingfisher plc
Performance |
| Timeline |
| LL Flooring Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kingfisher plc |
LL Flooring and Kingfisher Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LL Flooring and Kingfisher Plc
The main advantage of trading using opposite LL Flooring and Kingfisher Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LL Flooring position performs unexpectedly, Kingfisher Plc 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 Kingfisher Plc will offset losses from the drop in Kingfisher Plc's long position.| LL Flooring vs. Haverty Furniture Companies | LL Flooring vs. Arhaus Inc | LL Flooring vs. Tile Shop Holdings | LL Flooring vs. Floor Decor Holdings |
| Kingfisher Plc vs. Lowes Companies | Kingfisher Plc vs. Home Depot | Kingfisher Plc vs. Live Ventures | Kingfisher Plc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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