Correlation Between La Z and Aterian
Can any of the company-specific risk be diversified away by investing in both La Z and Aterian 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 La Z and Aterian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between La Z Boy Incorporated and Aterian, you can compare the effects of market volatilities on La Z and Aterian 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 La Z with a short position of Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and Aterian.
Diversification Opportunities for La Z and Aterian
Excellent diversification
The 3 months correlation between LZB and Aterian is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and La Z 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 La Z Boy Incorporated are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of La Z i.e., La Z and Aterian go up and down completely randomly.
Pair Corralation between La Z and Aterian
Considering the 90-day investment horizon La Z Boy Incorporated is expected to generate 0.3 times more return on investment than Aterian. However, La Z Boy Incorporated is 3.31 times less risky than Aterian. It trades about 0.12 of its potential returns per unit of risk. Aterian is currently generating about -0.07 per unit of risk. If you would invest 4,390 in La Z Boy Incorporated on October 25, 2024 and sell it today you would earn a total of 98.00 from holding La Z Boy Incorporated or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
La Z Boy Incorporated vs. Aterian
Performance |
| Timeline |
| La Z Boy |
| Aterian |
La Z and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Z and Aterian
The main advantage of trading using opposite La Z and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z position performs unexpectedly, Aterian 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 Aterian will offset losses from the drop in Aterian's long position.| La Z vs. Flexsteel Industries | La Z vs. Crown Crafts | La Z vs. Bassett Furniture Industries | La Z vs. Hamilton Beach Brands |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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