Correlation Between Natuzzi SpA and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Natuzzi SpA 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 Natuzzi SpA and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natuzzi SpA and Leggett Platt Incorporated, you can compare the effects of market volatilities on Natuzzi SpA 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 Natuzzi SpA with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natuzzi SpA and Leggett Platt.
Diversification Opportunities for Natuzzi SpA and Leggett Platt
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Natuzzi and Leggett is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Natuzzi SpA and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Natuzzi SpA 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 Natuzzi SpA 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 Natuzzi SpA i.e., Natuzzi SpA and Leggett Platt go up and down completely randomly.
Pair Corralation between Natuzzi SpA and Leggett Platt
Considering the 90-day investment horizon Natuzzi SpA is expected to generate 19.9 times more return on investment than Leggett Platt. However, Natuzzi SpA is 19.9 times more volatile than Leggett Platt Incorporated. It trades about 0.05 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about -0.06 per unit of risk. If you would invest 700.00 in Natuzzi SpA on August 28, 2024 and sell it today you would lose (250.00) from holding Natuzzi SpA or give up 35.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.2% |
| Values | Daily Returns |
Natuzzi SpA vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Natuzzi SpA |
| Leggett Platt |
Natuzzi SpA and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natuzzi SpA and Leggett Platt
The main advantage of trading using opposite Natuzzi SpA and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natuzzi SpA 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.| Natuzzi SpA vs. Bassett Furniture Industries | Natuzzi SpA vs. Hooker Furniture | Natuzzi SpA vs. Flexsteel Industries | Natuzzi SpA vs. Ethan Allen Interiors |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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