Correlation Between NORTHEAST UTILITIES and Haverty Furniture
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and Haverty 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 NORTHEAST UTILITIES and Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Haverty Furniture Companies, you can compare the effects of market volatilities on NORTHEAST UTILITIES and Haverty 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 NORTHEAST UTILITIES with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Haverty Furniture.
Diversification Opportunities for NORTHEAST UTILITIES and Haverty Furniture
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NORTHEAST and Haverty is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES are associated (or correlated) with Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Haverty Furniture go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Haverty Furniture
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 1.85 times less return on investment than Haverty Furniture. In addition to that, NORTHEAST UTILITIES is 1.38 times more volatile than Haverty Furniture Companies. It trades about 0.06 of its total potential returns per unit of risk. Haverty Furniture Companies is currently generating about 0.15 per unit of volatility. If you would invest 2,080 in Haverty Furniture Companies on October 30, 2024 and sell it today you would earn a total of 80.00 from holding Haverty Furniture Companies or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Haverty Furniture Companies
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Haverty Furniture |
NORTHEAST UTILITIES and Haverty Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Haverty Furniture
The main advantage of trading using opposite NORTHEAST UTILITIES and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, Haverty 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 Haverty Furniture will offset losses from the drop in Haverty Furniture's long position.| NORTHEAST UTILITIES vs. EPSILON HEALTHCARE LTD | NORTHEAST UTILITIES vs. BRIT AMER TOBACCO | NORTHEAST UTILITIES vs. TAL Education Group | NORTHEAST UTILITIES vs. EMBARK EDUCATION LTD |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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