Correlation Between Haverty Furniture and AutoNation
Can any of the company-specific risk be diversified away by investing in both Haverty Furniture and AutoNation 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 Haverty Furniture and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haverty Furniture Companies and AutoNation, you can compare the effects of market volatilities on Haverty Furniture and AutoNation 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 Haverty Furniture with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haverty Furniture and AutoNation.
Diversification Opportunities for Haverty Furniture and AutoNation
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Haverty and AutoNation is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and Haverty Furniture 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 Haverty Furniture Companies are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and AutoNation go up and down completely randomly.
Pair Corralation between Haverty Furniture and AutoNation
Considering the 90-day investment horizon Haverty Furniture is expected to generate 1.3 times less return on investment than AutoNation. But when comparing it to its historical volatility, Haverty Furniture Companies is 1.1 times less risky than AutoNation. It trades about 0.04 of its potential returns per unit of risk. AutoNation is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,536 in AutoNation on January 19, 2024 and sell it today you would earn a total of 4,926 from holding AutoNation or generate 46.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Haverty Furniture Companies vs. AutoNation
Performance |
| Timeline |
| Haverty Furniture |
| AutoNation |
Haverty Furniture and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haverty Furniture and AutoNation
The main advantage of trading using opposite Haverty Furniture and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Haverty Furniture vs. Floor Decor Holdings | Haverty Furniture vs. Live Ventures | Haverty Furniture vs. LL Flooring Holdings | Haverty Furniture vs. Kirklands |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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