Correlation Between Tile Shop and Kingfisher Plc
Can any of the company-specific risk be diversified away by investing in both Tile Shop and Kingfisher Plc 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 Tile Shop and Kingfisher Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tile Shop Holdings and Kingfisher plc, you can compare the effects of market volatilities on Tile Shop and Kingfisher Plc 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 Tile Shop with a short position of Kingfisher Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tile Shop and Kingfisher Plc.
Diversification Opportunities for Tile Shop and Kingfisher Plc
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tile and Kingfisher is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tile Shop Holdings and Kingfisher plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher plc and Tile Shop 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 Tile Shop Holdings are associated (or correlated) with Kingfisher Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher plc has no effect on the direction of Tile Shop i.e., Tile Shop and Kingfisher Plc go up and down completely randomly.
Pair Corralation between Tile Shop and Kingfisher Plc
Given the investment horizon of 90 days Tile Shop is expected to generate 1.1 times less return on investment than Kingfisher Plc. But when comparing it to its historical volatility, Tile Shop Holdings is 1.85 times less risky than Kingfisher Plc. It trades about 0.05 of its potential returns per unit of risk. Kingfisher plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 317.00 in Kingfisher plc on August 29, 2024 and sell it today you would earn a total of 43.00 from holding Kingfisher plc or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 71.5% |
| Values | Daily Returns |
Tile Shop Holdings vs. Kingfisher plc
Performance |
| Timeline |
| Tile Shop Holdings |
| Kingfisher plc |
Tile Shop and Kingfisher Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tile Shop and Kingfisher Plc
The main advantage of trading using opposite Tile Shop and Kingfisher Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tile Shop position performs unexpectedly, Kingfisher Plc 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 Kingfisher Plc will offset losses from the drop in Kingfisher Plc's long position.| Tile Shop vs. Kingfisher PLC ADR | Tile Shop vs. Haverty Furniture Companies | Tile Shop vs. Arhaus Inc | Tile Shop vs. Kirklands |
| Kingfisher Plc vs. Home Depot | Kingfisher Plc vs. Floor Decor Holdings | Kingfisher Plc vs. Arhaus Inc | Kingfisher Plc vs. Haverty Furniture Companies |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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