Correlation Between Under Armour and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Hooker Furniture, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Hooker Furniture.
Diversification Opportunities for Under Armour and Hooker Furniture
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Under and Hooker is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and Hooker Furniture go up and down completely randomly.
Pair Corralation between Under Armour and Hooker Furniture
Allowing for the 90-day total investment horizon Under Armour is expected to generate 1.0 times less return on investment than Hooker Furniture. In addition to that, Under Armour is 1.9 times more volatile than Hooker Furniture. It trades about 0.11 of its total potential returns per unit of risk. Hooker Furniture is currently generating about 0.2 per unit of volatility. If you would invest 1,659 in Hooker Furniture on September 3, 2024 and sell it today you would earn a total of 214.00 from holding Hooker Furniture or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. Hooker Furniture
Performance |
| Timeline |
| Under Armour C |
| Hooker Furniture |
Under Armour and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Hooker Furniture
The main advantage of trading using opposite Under Armour and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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