Correlation Between LL Flooring and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both LL Flooring and Lowes Companies 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 Lowes Companies 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 Lowes Companies, you can compare the effects of market volatilities on LL Flooring and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LL Flooring and Lowes Companies.
Diversification Opportunities for LL Flooring and Lowes Companies
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LL Flooring and Lowes is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding LL Flooring Holdings and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of LL Flooring i.e., LL Flooring and Lowes Companies go up and down completely randomly.
Pair Corralation between LL Flooring and Lowes Companies
Allowing for the 90-day total investment horizon LL Flooring Holdings is expected to under-perform the Lowes Companies. In addition to that, LL Flooring is 1.58 times more volatile than Lowes Companies. It trades about -0.47 of its total potential returns per unit of risk. Lowes Companies is currently generating about -0.33 per unit of volatility. If you would invest 25,400 in Lowes Companies on January 24, 2024 and sell it today you would lose (2,044) from holding Lowes Companies or give up 8.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LL Flooring Holdings vs. Lowes Companies
Performance |
| Timeline |
| LL Flooring Holdings |
| Lowes Companies |
LL Flooring and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LL Flooring and Lowes Companies
The main advantage of trading using opposite LL Flooring and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LL Flooring position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| LL Flooring vs. Arhaus Inc | LL Flooring vs. Haverty Furniture Companies | LL Flooring vs. Kirklands | LL Flooring vs. Live Ventures |
| Lowes Companies vs. Arhaus Inc | Lowes Companies vs. Haverty Furniture Companies | Lowes Companies vs. Kirklands | Lowes Companies vs. Live Ventures |
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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