Correlation Between Purple Innovation and Flexsteel Industries
Can any of the company-specific risk be diversified away by investing in both Purple Innovation and Flexsteel Industries 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 Purple Innovation and Flexsteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Purple Innovation and Flexsteel Industries, you can compare the effects of market volatilities on Purple Innovation and Flexsteel Industries 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 Purple Innovation with a short position of Flexsteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purple Innovation and Flexsteel Industries.
Diversification Opportunities for Purple Innovation and Flexsteel Industries
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Purple and Flexsteel is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Purple Innovation and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries and Purple Innovation 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 Purple Innovation are associated (or correlated) with Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of Purple Innovation i.e., Purple Innovation and Flexsteel Industries go up and down completely randomly.
Pair Corralation between Purple Innovation and Flexsteel Industries
Given the investment horizon of 90 days Purple Innovation is expected to under-perform the Flexsteel Industries. In addition to that, Purple Innovation is 1.8 times more volatile than Flexsteel Industries. It trades about -0.02 of its total potential returns per unit of risk. Flexsteel Industries is currently generating about 0.1 per unit of volatility. If you would invest 1,423 in Flexsteel Industries on August 27, 2024 and sell it today you would earn a total of 4,548 from holding Flexsteel Industries or generate 319.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Purple Innovation vs. Flexsteel Industries
Performance |
| Timeline |
| Purple Innovation |
| Flexsteel Industries |
Purple Innovation and Flexsteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Purple Innovation and Flexsteel Industries
The main advantage of trading using opposite Purple Innovation and Flexsteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purple Innovation position performs unexpectedly, Flexsteel Industries 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 Flexsteel Industries will offset losses from the drop in Flexsteel Industries' long position.| Purple Innovation vs. Tempur Sealy International | Purple Innovation vs. La Z Boy Incorporated | Purple Innovation vs. MasterBrand | Purple Innovation vs. Ethan Allen Interiors |
| Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands | Flexsteel Industries vs. First Business Financial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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