Correlation Between Mohawk Industries and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Mohawk Industries 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 Mohawk Industries and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mohawk Industries and Leggett Platt Incorporated, you can compare the effects of market volatilities on Mohawk Industries 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 Mohawk Industries with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mohawk Industries and Leggett Platt.
Diversification Opportunities for Mohawk Industries and Leggett Platt
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mohawk and Leggett is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Mohawk Industries 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 Mohawk Industries 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 Mohawk Industries i.e., Mohawk Industries and Leggett Platt go up and down completely randomly.
Pair Corralation between Mohawk Industries and Leggett Platt
Considering the 90-day investment horizon Mohawk Industries is expected to generate 0.83 times more return on investment than Leggett Platt. However, Mohawk Industries is 1.2 times less risky than Leggett Platt. It trades about 0.34 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 11,682 in Mohawk Industries on October 20, 2024 and sell it today you would earn a total of 1,245 from holding Mohawk Industries or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mohawk Industries vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Mohawk Industries |
| Leggett Platt |
Mohawk Industries and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mohawk Industries and Leggett Platt
The main advantage of trading using opposite Mohawk Industries and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mohawk Industries 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.| Mohawk Industries vs. Bassett Furniture Industries | Mohawk Industries vs. Ethan Allen Interiors | Mohawk Industries vs. Natuzzi SpA | Mohawk Industries 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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