Correlation Between MSA Safety and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both MSA Safety and Hooker Furniture 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 MSA Safety and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSA Safety and Hooker Furniture, you can compare the effects of market volatilities on MSA Safety and Hooker Furniture 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 MSA Safety with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSA Safety and Hooker Furniture.
Diversification Opportunities for MSA Safety and Hooker Furniture
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MSA and Hooker is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and MSA Safety 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 MSA Safety are associated (or correlated) with Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of MSA Safety i.e., MSA Safety and Hooker Furniture go up and down completely randomly.
Pair Corralation between MSA Safety and Hooker Furniture
Considering the 90-day investment horizon MSA Safety is expected to generate 2.1 times less return on investment than Hooker Furniture. But when comparing it to its historical volatility, MSA Safety is 2.39 times less risky than Hooker Furniture. It trades about 0.23 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,659 in Hooker Furniture on September 3, 2024 and sell it today you would earn a total of 214.00 from holding Hooker Furniture or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSA Safety vs. Hooker Furniture
Performance |
| Timeline |
| MSA Safety |
| Hooker Furniture |
MSA Safety and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSA Safety and Hooker Furniture
The main advantage of trading using opposite MSA Safety and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSA Safety position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.| MSA Safety vs. Allegion PLC | MSA Safety vs. Resideo Technologies | MSA Safety vs. NL Industries | MSA Safety vs. Brady |
| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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