Correlation Between Lovesac and Hamilton Beach
Can any of the company-specific risk be diversified away by investing in both Lovesac and Hamilton Beach 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 Lovesac and Hamilton Beach into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Lovesac and Hamilton Beach Brands, you can compare the effects of market volatilities on Lovesac and Hamilton Beach 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 Lovesac with a short position of Hamilton Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lovesac and Hamilton Beach.
Diversification Opportunities for Lovesac and Hamilton Beach
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lovesac and Hamilton is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Lovesac and Hamilton Beach Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Beach Brands and Lovesac 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 The Lovesac are associated (or correlated) with Hamilton Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Beach Brands has no effect on the direction of Lovesac i.e., Lovesac and Hamilton Beach go up and down completely randomly.
Pair Corralation between Lovesac and Hamilton Beach
Given the investment horizon of 90 days The Lovesac is expected to generate 0.61 times more return on investment than Hamilton Beach. However, The Lovesac is 1.65 times less risky than Hamilton Beach. It trades about 0.31 of its potential returns per unit of risk. Hamilton Beach Brands is currently generating about -0.31 per unit of risk. If you would invest 3,079 in The Lovesac on August 28, 2024 and sell it today you would earn a total of 768.00 from holding The Lovesac or generate 24.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Lovesac vs. Hamilton Beach Brands
Performance |
| Timeline |
| Lovesac |
| Hamilton Beach Brands |
Lovesac and Hamilton Beach Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lovesac and Hamilton Beach
The main advantage of trading using opposite Lovesac and Hamilton Beach positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lovesac position performs unexpectedly, Hamilton Beach 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 Hamilton Beach will offset losses from the drop in Hamilton Beach's long position.| Lovesac vs. Tempur Sealy International | Lovesac vs. La Z Boy Incorporated | Lovesac vs. Purple Innovation | Lovesac vs. MasterBrand |
| Hamilton Beach vs. Ethan Allen Interiors | Hamilton Beach vs. Mohawk Industries | Hamilton Beach vs. Tempur Sealy International | Hamilton Beach vs. MillerKnoll |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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