Correlation Between La Z and Lifetime Brands
Can any of the company-specific risk be diversified away by investing in both La Z and Lifetime Brands 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 Lifetime Brands 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 Lifetime Brands, you can compare the effects of market volatilities on La Z and Lifetime Brands 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 Lifetime Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and Lifetime Brands.
Diversification Opportunities for La Z and Lifetime Brands
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LZB and Lifetime is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and Lifetime Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifetime Brands 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 Lifetime Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifetime Brands has no effect on the direction of La Z i.e., La Z and Lifetime Brands go up and down completely randomly.
Pair Corralation between La Z and Lifetime Brands
Considering the 90-day investment horizon La Z Boy Incorporated is expected to generate 0.58 times more return on investment than Lifetime Brands. However, La Z Boy Incorporated is 1.73 times less risky than Lifetime Brands. It trades about 0.06 of its potential returns per unit of risk. Lifetime Brands is currently generating about 0.01 per unit of risk. If you would invest 2,624 in La Z Boy Incorporated on October 21, 2024 and sell it today you would earn a total of 1,862 from holding La Z Boy Incorporated or generate 70.96% 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. Lifetime Brands
Performance |
| Timeline |
| La Z Boy |
| Lifetime Brands |
La Z and Lifetime Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Z and Lifetime Brands
The main advantage of trading using opposite La Z and Lifetime Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z position performs unexpectedly, Lifetime Brands 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 Lifetime Brands will offset losses from the drop in Lifetime Brands' long position.| La Z vs. Flexsteel Industries | La Z vs. Crown Crafts | La Z vs. Bassett Furniture Industries | La Z vs. Hamilton Beach Brands |
| Lifetime Brands vs. Bassett Furniture Industries | Lifetime Brands vs. Flexsteel Industries | Lifetime Brands vs. Hamilton Beach Brands | Lifetime Brands vs. Natuzzi SpA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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