Correlation Between MasterBrand and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both MasterBrand 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 MasterBrand and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MasterBrand and Leggett Platt Incorporated, you can compare the effects of market volatilities on MasterBrand 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 MasterBrand with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of MasterBrand and Leggett Platt.
Diversification Opportunities for MasterBrand and Leggett Platt
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MasterBrand and Leggett is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding MasterBrand and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt 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 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 MasterBrand i.e., MasterBrand and Leggett Platt go up and down completely randomly.
Pair Corralation between MasterBrand and Leggett Platt
Considering the 90-day investment horizon MasterBrand is expected to generate 0.78 times more return on investment than Leggett Platt. However, MasterBrand is 1.29 times less risky than Leggett Platt. It trades about 0.55 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about 0.23 per unit of risk. If you would invest 1,461 in MasterBrand on October 20, 2024 and sell it today you would earn a total of 246.00 from holding MasterBrand or generate 16.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MasterBrand vs. Leggett Platt Incorporated
Performance |
| Timeline |
| MasterBrand |
| Leggett Platt |
MasterBrand and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MasterBrand and Leggett Platt
The main advantage of trading using opposite MasterBrand and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MasterBrand 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.| MasterBrand vs. Bassett Furniture Industries | MasterBrand vs. Ethan Allen Interiors | MasterBrand vs. Natuzzi SpA | MasterBrand vs. Flexsteel Industries |
| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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