Correlation Between McGrath RentCorp and Haverty Furniture
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp 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 McGrath RentCorp and Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Haverty Furniture Companies, you can compare the effects of market volatilities on McGrath RentCorp 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 McGrath RentCorp with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Haverty Furniture.
Diversification Opportunities for McGrath RentCorp and Haverty Furniture
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McGrath and Haverty is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture and McGrath RentCorp 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 McGrath RentCorp 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 McGrath RentCorp i.e., McGrath RentCorp and Haverty Furniture go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Haverty Furniture
Given the investment horizon of 90 days McGrath RentCorp is expected to under-perform the Haverty Furniture. But the stock apears to be less risky and, when comparing its historical volatility, McGrath RentCorp is 2.04 times less risky than Haverty Furniture. The stock trades about -0.34 of its potential returns per unit of risk. The Haverty Furniture Companies is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 3,381 in Haverty Furniture Companies on February 1, 2024 and sell it today you would lose (280.00) from holding Haverty Furniture Companies or give up 8.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
McGrath RentCorp vs. Haverty Furniture Companies
Performance |
Timeline |
McGrath RentCorp |
Haverty Furniture |
McGrath RentCorp and Haverty Furniture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McGrath RentCorp and Haverty Furniture
The main advantage of trading using opposite McGrath RentCorp and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp 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.McGrath RentCorp vs. The Aarons | McGrath RentCorp vs. Alta Equipment Group | McGrath RentCorp vs. GATX Corporation | McGrath RentCorp vs. Ryder System |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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