Correlation Between Mohawk Industries and La Z
Can any of the company-specific risk be diversified away by investing in both Mohawk Industries and La Z 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 La Z into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mohawk Industries and La Z Boy Incorporated, you can compare the effects of market volatilities on Mohawk Industries and La Z 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 La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mohawk Industries and La Z.
Diversification Opportunities for Mohawk Industries and La Z
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mohawk and LZB is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Z Boy 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 La Z. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Z Boy has no effect on the direction of Mohawk Industries i.e., Mohawk Industries and La Z go up and down completely randomly.
Pair Corralation between Mohawk Industries and La Z
Considering the 90-day investment horizon Mohawk Industries is expected to generate 1.36 times less return on investment than La Z. In addition to that, Mohawk Industries is 1.11 times more volatile than La Z Boy Incorporated. It trades about 0.24 of its total potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.37 per unit of volatility. If you would invest 3,981 in La Z Boy Incorporated on August 28, 2024 and sell it today you would earn a total of 596.00 from holding La Z Boy Incorporated or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mohawk Industries vs. La Z Boy Incorporated
Performance |
| Timeline |
| Mohawk Industries |
| La Z Boy |
Mohawk Industries and La Z Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mohawk Industries and La Z
The main advantage of trading using opposite Mohawk Industries and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mohawk Industries position performs unexpectedly, La Z 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 La Z will offset losses from the drop in La Z'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 |
| La Z vs. Flexsteel Industries | La Z vs. Crown Crafts | La Z vs. Bassett Furniture Industries | La Z vs. Hamilton Beach Brands |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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