Correlation Between La Z and Haverty Furniture
Can any of the company-specific risk be diversified away by investing in both La Z and Haverty Furniture 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 Haverty Furniture 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 Haverty Furniture Companies, you can compare the effects of market volatilities on La Z and Haverty Furniture 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 Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and Haverty Furniture.
Diversification Opportunities for La Z and Haverty Furniture
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between LZB and Haverty is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture 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 Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of La Z i.e., La Z and Haverty Furniture go up and down completely randomly.
Pair Corralation between La Z and Haverty Furniture
Considering the 90-day investment horizon La Z Boy Incorporated is expected to generate 0.68 times more return on investment than Haverty Furniture. However, La Z Boy Incorporated is 1.48 times less risky than Haverty Furniture. It trades about 0.38 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about 0.04 per unit of risk. If you would invest 3,981 in La Z Boy Incorporated on August 28, 2024 and sell it today you would earn a total of 596.00 from holding La Z Boy Incorporated or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
La Z Boy Incorporated vs. Haverty Furniture Companies
Performance |
| Timeline |
| La Z Boy |
| Haverty Furniture |
La Z and Haverty Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Z and Haverty Furniture
The main advantage of trading using opposite La Z and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z position performs unexpectedly, Haverty Furniture 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 Haverty Furniture will offset losses from the drop in Haverty Furniture'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 |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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