Correlation Between La Z and Sierra Bancorp
Can any of the company-specific risk be diversified away by investing in both La Z and Sierra Bancorp 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 Sierra Bancorp 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 Sierra Bancorp, you can compare the effects of market volatilities on La Z and Sierra Bancorp 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 Sierra Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and Sierra Bancorp.
Diversification Opportunities for La Z and Sierra Bancorp
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LZB and Sierra is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and Sierra Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Bancorp 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 Sierra Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Bancorp has no effect on the direction of La Z i.e., La Z and Sierra Bancorp go up and down completely randomly.
Pair Corralation between La Z and Sierra Bancorp
Considering the 90-day investment horizon La Z Boy Incorporated is expected to generate 0.92 times more return on investment than Sierra Bancorp. However, La Z Boy Incorporated is 1.09 times less risky than Sierra Bancorp. It trades about 0.06 of its potential returns per unit of risk. Sierra Bancorp is currently generating about 0.05 per unit of risk. If you would invest 2,718 in La Z Boy Incorporated on November 2, 2024 and sell it today you would earn a total of 2,002 from holding La Z Boy Incorporated or generate 73.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
La Z Boy Incorporated vs. Sierra Bancorp
Performance |
| Timeline |
| La Z Boy |
| Sierra Bancorp |
La Z and Sierra Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Z and Sierra Bancorp
The main advantage of trading using opposite La Z and Sierra Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z position performs unexpectedly, Sierra Bancorp 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 Sierra Bancorp will offset losses from the drop in Sierra Bancorp'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 |
| Sierra Bancorp vs. Home Federal Bancorp | Sierra Bancorp vs. First Financial Northwest | Sierra Bancorp vs. First Northwest Bancorp | Sierra Bancorp vs. First Capital |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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