Correlation Between Old Dominion and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Old Dominion 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 Old Dominion and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Dominion Freight and Hooker Furniture, you can compare the effects of market volatilities on Old Dominion 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 Old Dominion with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Hooker Furniture.
Diversification Opportunities for Old Dominion and Hooker Furniture
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Hooker is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Old Dominion 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 Old Dominion Freight 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 Old Dominion i.e., Old Dominion and Hooker Furniture go up and down completely randomly.
Pair Corralation between Old Dominion and Hooker Furniture
Given the investment horizon of 90 days Old Dominion is expected to generate 1.52 times less return on investment than Hooker Furniture. But when comparing it to its historical volatility, Old Dominion Freight is 1.12 times less risky than Hooker Furniture. It trades about 0.2 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,605 in Hooker Furniture on August 27, 2024 and sell it today you would earn a total of 306.00 from holding Hooker Furniture or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. Hooker Furniture
Performance |
| Timeline |
| Old Dominion Freight |
| Hooker Furniture |
Old Dominion and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Hooker Furniture
The main advantage of trading using opposite Old Dominion and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion 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.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |