Correlation Between Purple Innovation and Lifetime Brands
Can any of the company-specific risk be diversified away by investing in both Purple Innovation and Lifetime Brands 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 Lifetime Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Purple Innovation and Lifetime Brands, you can compare the effects of market volatilities on Purple Innovation and Lifetime Brands 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 Lifetime Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purple Innovation and Lifetime Brands.
Diversification Opportunities for Purple Innovation and Lifetime Brands
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Purple and Lifetime is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Purple Innovation and Lifetime Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifetime Brands 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 Lifetime Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifetime Brands has no effect on the direction of Purple Innovation i.e., Purple Innovation and Lifetime Brands go up and down completely randomly.
Pair Corralation between Purple Innovation and Lifetime Brands
Given the investment horizon of 90 days Purple Innovation is expected to generate 2.03 times less return on investment than Lifetime Brands. In addition to that, Purple Innovation is 1.39 times more volatile than Lifetime Brands. It trades about 0.07 of its total potential returns per unit of risk. Lifetime Brands is currently generating about 0.19 per unit of volatility. If you would invest 525.00 in Lifetime Brands on August 28, 2024 and sell it today you would earn a total of 64.00 from holding Lifetime Brands or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Purple Innovation vs. Lifetime Brands
Performance |
| Timeline |
| Purple Innovation |
| Lifetime Brands |
Purple Innovation and Lifetime Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Purple Innovation and Lifetime Brands
The main advantage of trading using opposite Purple Innovation and Lifetime Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purple Innovation position performs unexpectedly, Lifetime Brands 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 Lifetime Brands will offset losses from the drop in Lifetime Brands' 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 |
| Lifetime Brands vs. Bassett Furniture Industries | Lifetime Brands vs. Flexsteel Industries | Lifetime Brands vs. Hamilton Beach Brands | Lifetime Brands vs. Natuzzi SpA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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