Correlation Between La Z and MillerKnoll
Can any of the company-specific risk be diversified away by investing in both La Z and MillerKnoll 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 MillerKnoll 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 MillerKnoll, you can compare the effects of market volatilities on La Z and MillerKnoll 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 MillerKnoll. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and MillerKnoll.
Diversification Opportunities for La Z and MillerKnoll
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LZB and MillerKnoll is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and MillerKnoll in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MillerKnoll 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 MillerKnoll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MillerKnoll has no effect on the direction of La Z i.e., La Z and MillerKnoll go up and down completely randomly.
Pair Corralation between La Z and MillerKnoll
Considering the 90-day investment horizon La Z Boy Incorporated is expected to generate 0.75 times more return on investment than MillerKnoll. However, La Z Boy Incorporated is 1.33 times less risky than MillerKnoll. It trades about 0.07 of its potential returns per unit of risk. MillerKnoll is currently generating about 0.03 per unit of risk. If you would invest 2,333 in La Z Boy Incorporated on August 27, 2024 and sell it today you would earn a total of 2,036 from holding La Z Boy Incorporated or generate 87.27% 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. MillerKnoll
Performance |
| Timeline |
| La Z Boy |
| MillerKnoll |
La Z and MillerKnoll Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Z and MillerKnoll
The main advantage of trading using opposite La Z and MillerKnoll positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z position performs unexpectedly, MillerKnoll 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 MillerKnoll will offset losses from the drop in MillerKnoll'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 |
| MillerKnoll vs. Bassett Furniture Industries | MillerKnoll vs. Ethan Allen Interiors | MillerKnoll vs. Natuzzi SpA | MillerKnoll vs. Flexsteel Industries |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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