Correlation Between Western Acquisition and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Western Acquisition 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 Western Acquisition and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and Hooker Furniture, you can compare the effects of market volatilities on Western Acquisition 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 Western Acquisition with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Hooker Furniture.
Diversification Opportunities for Western Acquisition and Hooker Furniture
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Hooker is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Western Acquisition 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 Western Acquisition Ventures 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 Western Acquisition i.e., Western Acquisition and Hooker Furniture go up and down completely randomly.
Pair Corralation between Western Acquisition and Hooker Furniture
Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the Hooker Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Western Acquisition Ventures is 1.85 times less risky than Hooker Furniture. The stock trades about -0.14 of its potential returns per unit of risk. The Hooker Furniture is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,684 in Hooker Furniture on August 31, 2024 and sell it today you would earn a total of 179.00 from holding Hooker Furniture or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Hooker Furniture
Performance |
| Timeline |
| Western Acquisition |
| Hooker Furniture |
Western Acquisition and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Hooker Furniture
The main advantage of trading using opposite Western Acquisition and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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.| Western Acquisition vs. PowerUp Acquisition Corp | Western Acquisition vs. HUMANA INC | Western Acquisition vs. Aquagold International | Western Acquisition vs. Barloworld Ltd ADR |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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