Correlation Between THRACE PLASTICS and Haverty Furniture
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS 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 THRACE PLASTICS and Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and Haverty Furniture Companies, you can compare the effects of market volatilities on THRACE PLASTICS 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 THRACE PLASTICS with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and Haverty Furniture.
Diversification Opportunities for THRACE PLASTICS and Haverty Furniture
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between THRACE and Haverty is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS i.e., THRACE PLASTICS and Haverty Furniture go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and Haverty Furniture
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.75 times more return on investment than Haverty Furniture. However, THRACE PLASTICS is 1.33 times less risky than Haverty Furniture. It trades about 0.1 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about 0.06 per unit of risk. If you would invest 380.00 in THRACE PLASTICS on September 12, 2024 and sell it today you would earn a total of 12.00 from holding THRACE PLASTICS or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
THRACE PLASTICS vs. Haverty Furniture Companies
Performance |
| Timeline |
| THRACE PLASTICS |
| Haverty Furniture |
THRACE PLASTICS and Haverty Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and Haverty Furniture
The main advantage of trading using opposite THRACE PLASTICS and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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.| THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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