Correlation Between MasterBrand and Flexsteel Industries
Can any of the company-specific risk be diversified away by investing in both MasterBrand and Flexsteel Industries 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 MasterBrand and Flexsteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MasterBrand and Flexsteel Industries, you can compare the effects of market volatilities on MasterBrand and Flexsteel Industries 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 MasterBrand with a short position of Flexsteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of MasterBrand and Flexsteel Industries.
Diversification Opportunities for MasterBrand and Flexsteel Industries
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MasterBrand and Flexsteel is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MasterBrand and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries and MasterBrand 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 MasterBrand are associated (or correlated) with Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of MasterBrand i.e., MasterBrand and Flexsteel Industries go up and down completely randomly.
Pair Corralation between MasterBrand and Flexsteel Industries
Considering the 90-day investment horizon MasterBrand is expected to under-perform the Flexsteel Industries. But the stock apears to be less risky and, when comparing its historical volatility, MasterBrand is 1.02 times less risky than Flexsteel Industries. The stock trades about -0.06 of its potential returns per unit of risk. The Flexsteel Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,802 in Flexsteel Industries on August 28, 2024 and sell it today you would earn a total of 135.00 from holding Flexsteel Industries or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MasterBrand vs. Flexsteel Industries
Performance |
| Timeline |
| MasterBrand |
| Flexsteel Industries |
MasterBrand and Flexsteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MasterBrand and Flexsteel Industries
The main advantage of trading using opposite MasterBrand and Flexsteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MasterBrand position performs unexpectedly, Flexsteel Industries 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 Flexsteel Industries will offset losses from the drop in Flexsteel Industries' long position.| MasterBrand vs. Bassett Furniture Industries | MasterBrand vs. Ethan Allen Interiors | MasterBrand vs. Natuzzi SpA | MasterBrand vs. Flexsteel Industries |
| Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands | Flexsteel Industries 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |