Correlation Between La Z and Lovesac
Can any of the company-specific risk be diversified away by investing in both La Z and Lovesac 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 Lovesac 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 The Lovesac, you can compare the effects of market volatilities on La Z and Lovesac 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 Lovesac. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and Lovesac.
Diversification Opportunities for La Z and Lovesac
Weak diversification
The 3 months correlation between LZB and Lovesac is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and The Lovesac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lovesac 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 Lovesac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lovesac has no effect on the direction of La Z i.e., La Z and Lovesac go up and down completely randomly.
Pair Corralation between La Z and Lovesac
Considering the 90-day investment horizon La Z is expected to generate 1.65 times less return on investment than Lovesac. But when comparing it to its historical volatility, La Z Boy Incorporated is 1.95 times less risky than Lovesac. It trades about 0.38 of its potential returns per unit of risk. The Lovesac is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3,079 in The Lovesac on August 28, 2024 and sell it today you would earn a total of 768.00 from holding The Lovesac or generate 24.94% 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. The Lovesac
Performance |
| Timeline |
| La Z Boy |
| Lovesac |
La Z and Lovesac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Z and Lovesac
The main advantage of trading using opposite La Z and Lovesac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z position performs unexpectedly, Lovesac 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 Lovesac will offset losses from the drop in Lovesac'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 |
| Lovesac vs. Tempur Sealy International | Lovesac vs. La Z Boy Incorporated | Lovesac vs. Purple Innovation | Lovesac vs. MasterBrand |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |