Correlation Between RH and Haverty Furniture
Can any of the company-specific risk be diversified away by investing in both RH 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 RH and Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RH and Haverty Furniture Companies, you can compare the effects of market volatilities on RH 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 RH with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of RH and Haverty Furniture.
Diversification Opportunities for RH and Haverty Furniture
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between RH and Haverty is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding RH and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture and RH 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 RH 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 RH i.e., RH and Haverty Furniture go up and down completely randomly.
Pair Corralation between RH and Haverty Furniture
Allowing for the 90-day total investment horizon RH is expected to generate 1.56 times more return on investment than Haverty Furniture. However, RH is 1.56 times more volatile than Haverty Furniture Companies. It trades about 0.04 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about 0.0 per unit of risk. If you would invest 27,448 in RH on August 30, 2024 and sell it today you would earn a total of 11,208 from holding RH or generate 40.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RH vs. Haverty Furniture Companies
Performance |
| Timeline |
| RH |
| Haverty Furniture |
RH and Haverty Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RH and Haverty Furniture
The main advantage of trading using opposite RH and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RH 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.The idea behind RH and Haverty Furniture Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Haverty Furniture vs. Floor Decor Holdings | Haverty Furniture vs. Live Ventures | Haverty Furniture vs. Haverty Furniture Companies | Haverty Furniture vs. Home Depot |
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 Stocks Directory module to find actively traded stocks across global markets.
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