Correlation Between La Z and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both La Z 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 La Z and Leggett Platt 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 Leggett Platt Incorporated, you can compare the effects of market volatilities on La Z 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 La Z with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and Leggett Platt.
Diversification Opportunities for La Z and Leggett Platt
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LZB and Leggett is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt 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 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 La Z i.e., La Z and Leggett Platt go up and down completely randomly.
Pair Corralation between La Z and Leggett Platt
Considering the 90-day investment horizon La Z Boy Incorporated is expected to generate 0.54 times more return on investment than Leggett Platt. However, La Z Boy Incorporated is 1.84 times less risky than Leggett Platt. It trades about 0.38 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about 0.12 per unit of risk. If you would invest 3,981 in La Z Boy Incorporated on August 27, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
La Z Boy Incorporated vs. Leggett Platt Incorporated
Performance |
| Timeline |
| La Z Boy |
| Leggett Platt |
La Z and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Z and Leggett Platt
The main advantage of trading using opposite La Z and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z 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.| La Z vs. Flexsteel Industries | La Z vs. Crown Crafts | La Z vs. Bassett Furniture Industries | La Z vs. Hamilton Beach Brands |
| Leggett Platt vs. Willis Lease Finance | Leggett Platt vs. Rocky Brands | Leggett Platt vs. First Business Financial |
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.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |