Correlation Between MillerKnoll and Lovesac
Can any of the company-specific risk be diversified away by investing in both MillerKnoll and Lovesac 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 MillerKnoll and Lovesac into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MillerKnoll and The Lovesac, you can compare the effects of market volatilities on MillerKnoll and Lovesac 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 MillerKnoll with a short position of Lovesac. Check out your portfolio center. Please also check ongoing floating volatility patterns of MillerKnoll and Lovesac.
Diversification Opportunities for MillerKnoll and Lovesac
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MillerKnoll and Lovesac is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MillerKnoll and The Lovesac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lovesac and MillerKnoll 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 MillerKnoll are associated (or correlated) with Lovesac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lovesac has no effect on the direction of MillerKnoll i.e., MillerKnoll and Lovesac go up and down completely randomly.
Pair Corralation between MillerKnoll and Lovesac
Given the investment horizon of 90 days MillerKnoll is expected to generate 0.8 times more return on investment than Lovesac. However, MillerKnoll is 1.25 times less risky than Lovesac. It trades about 0.07 of its potential returns per unit of risk. The Lovesac is currently generating about 0.05 per unit of risk. If you would invest 1,331 in MillerKnoll on August 27, 2024 and sell it today you would earn a total of 1,122 from holding MillerKnoll or generate 84.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MillerKnoll vs. The Lovesac
Performance |
| Timeline |
| MillerKnoll |
| Lovesac |
MillerKnoll and Lovesac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MillerKnoll and Lovesac
The main advantage of trading using opposite MillerKnoll and Lovesac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MillerKnoll position performs unexpectedly, Lovesac 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 Lovesac will offset losses from the drop in Lovesac's long position.| MillerKnoll vs. Bassett Furniture Industries | MillerKnoll vs. Ethan Allen Interiors | MillerKnoll vs. Natuzzi SpA | MillerKnoll vs. Flexsteel Industries |
| Lovesac vs. Tempur Sealy International | Lovesac vs. La Z Boy Incorporated | Lovesac vs. Purple Innovation | Lovesac vs. MasterBrand |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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