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

0.09

Correlation Coefficient

Haverty Furniture  Kirklands

Significant diversification

The 3 months correlation between Haverty and Kirklands is 0.09. 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

Assuming the 90 days horizon Haverty Furniture Companies is expected to generate 51.08 times more return on investment than Kirklands. However, Haverty Furniture is 51.08 times more volatile than Kirklands. It trades about 0.28 of its potential returns per unit of risk. Kirklands is currently generating about 0.38 per unit of risk. If you would invest  0.00  in Haverty Furniture Companies on July 1, 2024 and sell it today you would earn a total of  2,695  from holding Haverty Furniture Companies or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

Haverty Furniture Companies  vs.  Kirklands

Haverty Furniture

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Haverty Furniture Companies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Haverty Furniture sustained solid returns over the last few months and may actually be approaching a breakup point.

Kirklands

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kirklands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Kirklands disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Haverty Furniture Companies and Kirklands 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.