Correlation Between Tempur Sealy and La-Z-Boy Incorporated
Can any of the company-specific risk be diversified away by investing in both Tempur Sealy and La-Z-Boy Incorporated 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 Tempur Sealy and La-Z-Boy Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tempur Sealy International and La Z Boy Incorporated, you can compare the effects of market volatilities on Tempur Sealy and La-Z-Boy Incorporated 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 Tempur Sealy with a short position of La-Z-Boy Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempur Sealy and La-Z-Boy Incorporated.
Diversification Opportunities for Tempur Sealy and La-Z-Boy Incorporated
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tempur and La-Z-Boy is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Tempur Sealy International and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La-Z-Boy Incorporated and Tempur Sealy 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 Tempur Sealy International are associated (or correlated) with La-Z-Boy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La-Z-Boy Incorporated has no effect on the direction of Tempur Sealy i.e., Tempur Sealy and La-Z-Boy Incorporated go up and down completely randomly.
Pair Corralation between Tempur Sealy and La-Z-Boy Incorporated
Assuming the 90 days horizon Tempur Sealy is expected to generate 1.07 times less return on investment than La-Z-Boy Incorporated. But when comparing it to its historical volatility, Tempur Sealy International is 1.06 times less risky than La-Z-Boy Incorporated. It trades about 0.08 of its potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,781 in La Z Boy Incorporated on September 15, 2024 and sell it today you would earn a total of 1,419 from holding La Z Boy Incorporated or generate 51.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.64% |
| Values | Daily Returns |
Tempur Sealy International vs. La Z Boy Incorporated
Performance |
| Timeline |
| Tempur Sealy Interna |
| La-Z-Boy Incorporated |
Tempur Sealy and La-Z-Boy Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tempur Sealy and La-Z-Boy Incorporated
The main advantage of trading using opposite Tempur Sealy and La-Z-Boy Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempur Sealy position performs unexpectedly, La-Z-Boy Incorporated 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 La-Z-Boy Incorporated will offset losses from the drop in La-Z-Boy Incorporated's long position.| Tempur Sealy vs. THAI BEVERAGE | Tempur Sealy vs. MagnaChip Semiconductor Corp | Tempur Sealy vs. COFCO Joycome Foods | Tempur Sealy vs. SENECA FOODS A |
| La-Z-Boy Incorporated vs. ONWARD MEDICAL BV | La-Z-Boy Incorporated vs. INTER CARS SA | La-Z-Boy Incorporated vs. United States Steel | La-Z-Boy Incorporated vs. ALGOMA STEEL GROUP |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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