Correlation Between Lovesac and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Lovesac and Leggett Platt 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 Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Lovesac and Leggett Platt Incorporated, you can compare the effects of market volatilities on Lovesac and Leggett Platt 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 Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lovesac and Leggett Platt.
Diversification Opportunities for Lovesac and Leggett Platt
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lovesac and Leggett is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Lovesac and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt 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 Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Lovesac i.e., Lovesac and Leggett Platt go up and down completely randomly.
Pair Corralation between Lovesac and Leggett Platt
Given the investment horizon of 90 days The Lovesac is expected to generate 1.04 times more return on investment than Leggett Platt. However, Lovesac is 1.04 times more volatile than Leggett Platt Incorporated. It trades about 0.3 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about 0.23 per unit of risk. If you would invest 2,342 in The Lovesac on October 20, 2024 and sell it today you would earn a total of 272.00 from holding The Lovesac or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Lovesac vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Lovesac |
| Leggett Platt |
Lovesac and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lovesac and Leggett Platt
The main advantage of trading using opposite Lovesac and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lovesac position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Lovesac vs. Tempur Sealy International | Lovesac vs. La Z Boy Incorporated | Lovesac vs. Purple Innovation | Lovesac vs. MasterBrand |
| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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