Correlation Between LL Flooring and Haverty Furniture

Can any of the company-specific risk be diversified away by investing in both LL Flooring and Haverty 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 LL Flooring and Haverty Furniture 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 Haverty Furniture Companies, you can compare the effects of market volatilities on LL Flooring and Haverty 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 LL Flooring with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of LL Flooring and Haverty Furniture.

Diversification Opportunities for LL Flooring and Haverty Furniture

-0.5

Correlation Coefficient

LL Flooring  Haverty Furniture

Very good diversification

The 3 months correlation between LL Flooring and Haverty is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LL Flooring Holdings and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture 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 Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of LL Flooring i.e., LL Flooring and Haverty Furniture go up and down completely randomly.

Pair Corralation between LL Flooring and Haverty Furniture

Allowing for the 90-day total investment horizon LL Flooring Holdings is expected to under-perform the Haverty Furniture. But the stock apears to be less risky and, when comparing its historical volatility, LL Flooring Holdings is 1.11 times less risky than Haverty Furniture. The stock trades about -0.17 of its potential returns per unit of risk. The Haverty Furniture Companies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,528  in Haverty Furniture Companies on February 1, 2024 and sell it today you would earn a total of  717.00  from holding Haverty Furniture Companies or generate 28.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	59.02%
Values	Daily Returns

LL Flooring Holdings  vs.  Haverty Furniture Companies

LL Flooring Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LL Flooring Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Haverty Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LL Flooring and Haverty Furniture

The main advantage of trading using opposite LL Flooring and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LL Flooring position performs unexpectedly, Haverty 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 Haverty Furniture will offset losses from the drop in Haverty Furniture's long position.

The idea behind LL Flooring Holdings and Haverty Furniture Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.