Correlation Between LL Flooring and Ford
Can any of the company-specific risk be diversified away by investing in both LL Flooring and Ford 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 LL Flooring and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LL Flooring Holdings and Ford Motor, you can compare the effects of market volatilities on LL Flooring and Ford 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 LL Flooring with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of LL Flooring and Ford.
Diversification Opportunities for LL Flooring and Ford
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LL Flooring and Ford is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding LL Flooring Holdings and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and LL Flooring 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 LL Flooring Holdings are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of LL Flooring i.e., LL Flooring and Ford go up and down completely randomly.
Pair Corralation between LL Flooring and Ford
Allowing for the 90-day total investment horizon LL Flooring Holdings is expected to under-perform the Ford. In addition to that, LL Flooring is 1.0 times more volatile than Ford Motor. It trades about -0.07 of its total potential returns per unit of risk. Ford Motor is currently generating about -0.03 per unit of volatility. If you would invest 1,230 in Ford Motor on January 19, 2024 and sell it today you would lose (26.00) from holding Ford Motor or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
LL Flooring Holdings vs. Ford Motor
Performance |
| Timeline |
| LL Flooring Holdings |
| Ford Motor |
LL Flooring and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LL Flooring and Ford
The main advantage of trading using opposite LL Flooring and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LL Flooring position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| LL Flooring vs. Haverty Furniture Companies | LL Flooring vs. Arhaus Inc | LL Flooring vs. Tile Shop Holdings | LL Flooring vs. Floor Decor Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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