Correlation Between Haverty Furniture and Kirklands
Can any of the company-specific risk be diversified away by investing in both Haverty Furniture and Kirklands 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 Kirklands 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 Kirklands, you can compare the effects of market volatilities on Haverty Furniture and Kirklands 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 Kirklands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haverty Furniture and Kirklands.
Diversification Opportunities for Haverty Furniture and Kirklands
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Haverty and Kirklands is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and Kirklands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirklands 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 Kirklands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirklands has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and Kirklands go up and down completely randomly.
Pair Corralation between Haverty Furniture and Kirklands
Considering the 90-day investment horizon Haverty Furniture Companies is expected to generate 0.34 times more return on investment than Kirklands. However, Haverty Furniture Companies is 2.94 times less risky than Kirklands. It trades about -0.16 of its potential returns per unit of risk. Kirklands is currently generating about -0.16 per unit of risk. If you would invest 3,318 in Haverty Furniture Companies on February 1, 2024 and sell it today you would lose (238.00) from holding Haverty Furniture Companies or give up 7.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Haverty Furniture Companies vs. Kirklands
Performance |
Timeline |
Haverty Furniture |
Kirklands |
Haverty Furniture and Kirklands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Haverty Furniture and Kirklands
The main advantage of trading using opposite Haverty Furniture and Kirklands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture position performs unexpectedly, Kirklands 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 Kirklands will offset losses from the drop in Kirklands' long position.Haverty Furniture vs. Custom Truck One | Haverty Furniture vs. PROG Holdings | Haverty Furniture vs. McGrath RentCorp | Haverty Furniture vs. HE Equipment Services |
Kirklands vs. Custom Truck One | Kirklands vs. PROG Holdings | Kirklands vs. McGrath RentCorp | Kirklands vs. HE Equipment Services |
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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