Correlation Between Weyco and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Weyco 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 Weyco and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Hooker Furniture, you can compare the effects of market volatilities on Weyco 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 Weyco with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Hooker Furniture.
Diversification Opportunities for Weyco and Hooker Furniture
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Weyco and Hooker is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Weyco 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 Weyco Group 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 Weyco i.e., Weyco and Hooker Furniture go up and down completely randomly.
Pair Corralation between Weyco and Hooker Furniture
Given the investment horizon of 90 days Weyco Group is expected to generate 0.93 times more return on investment than Hooker Furniture. However, Weyco Group is 1.08 times less risky than Hooker Furniture. It trades about 0.04 of its potential returns per unit of risk. Hooker Furniture is currently generating about -0.01 per unit of risk. If you would invest 3,243 in Weyco Group on October 22, 2024 and sell it today you would earn a total of 285.00 from holding Weyco Group or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Hooker Furniture
Performance |
| Timeline |
| Weyco Group |
| Hooker Furniture |
Weyco and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Hooker Furniture
The main advantage of trading using opposite Weyco and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco 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.The idea behind Weyco Group and Hooker Furniture pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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