Correlation Between Western Sierra and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Western Sierra 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 Sierra 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 Sierra Mining and Hooker Furniture, you can compare the effects of market volatilities on Western Sierra 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 Sierra with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and Hooker Furniture.
Diversification Opportunities for Western Sierra and Hooker Furniture
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Hooker is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Western Sierra 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 Sierra Mining 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 Sierra i.e., Western Sierra and Hooker Furniture go up and down completely randomly.
Pair Corralation between Western Sierra and Hooker Furniture
Given the investment horizon of 90 days Western Sierra Mining is expected to generate 39.06 times more return on investment than Hooker Furniture. However, Western Sierra is 39.06 times more volatile than Hooker Furniture. It trades about 0.1 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.02 per unit of risk. If you would invest 9.80 in Western Sierra Mining on August 29, 2024 and sell it today you would lose (9.12) from holding Western Sierra Mining or give up 93.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Sierra Mining vs. Hooker Furniture
Performance |
| Timeline |
| Western Sierra Mining |
| Hooker Furniture |
Western Sierra and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Sierra and Hooker Furniture
The main advantage of trading using opposite Western Sierra and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Sierra 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 Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
| Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture vs. First Business Financial |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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