Correlation Between Smith Douglas and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Smith Douglas 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 Smith Douglas and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Douglas Homes and Hooker Furniture, you can compare the effects of market volatilities on Smith Douglas 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 Smith Douglas with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Douglas and Hooker Furniture.
Diversification Opportunities for Smith Douglas and Hooker Furniture
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smith and Hooker is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Smith Douglas Homes and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Smith Douglas 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 Smith Douglas Homes 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 Smith Douglas i.e., Smith Douglas and Hooker Furniture go up and down completely randomly.
Pair Corralation between Smith Douglas and Hooker Furniture
Given the investment horizon of 90 days Smith Douglas Homes is expected to generate 1.03 times more return on investment than Hooker Furniture. However, Smith Douglas is 1.03 times more volatile than Hooker Furniture. It trades about -0.01 of its potential returns per unit of risk. Hooker Furniture is currently generating about -0.07 per unit of risk. If you would invest 2,752 in Smith Douglas Homes on November 8, 2024 and sell it today you would lose (424.00) from holding Smith Douglas Homes or give up 15.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith Douglas Homes vs. Hooker Furniture
Performance |
| Timeline |
| Smith Douglas Homes |
| Hooker Furniture |
Smith Douglas and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Douglas and Hooker Furniture
The main advantage of trading using opposite Smith Douglas and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Douglas 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.| Smith Douglas vs. Marine Products | Smith Douglas vs. Playtika Holding Corp | Smith Douglas vs. Life Time Group | Smith Douglas vs. DR Horton |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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