Correlation Between Corporate Travel and La Z

Can any of the company-specific risk be diversified away by investing in both Corporate Travel and La Z 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 Corporate Travel and La Z into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corporate Travel Management and La Z Boy Incorporated, you can compare the effects of market volatilities on Corporate Travel and La Z 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 Corporate Travel with a short position of La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and La Z.

Diversification Opportunities for Corporate Travel and La Z

0.76

Correlation Coefficient

Corporate Travel  La Z

Poor diversification

The 3 months correlation between Corporate and LAZ is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Z Boy and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with La Z. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Z Boy has no effect on the direction of Corporate Travel i.e., Corporate Travel and La Z go up and down completely randomly.

Pair Corralation between Corporate Travel and La Z

Assuming the 90 days trading horizon Corporate Travel Management is expected to under-perform the La Z. In addition to that, Corporate Travel is 1.97 times more volatile than La Z Boy Incorporated. It trades about -0.2 of its total potential returns per unit of risk. La Z Boy Incorporated is currently generating about -0.14 per unit of volatility. If you would invest  4,280  in La Z Boy Incorporated on October 11, 2024 and sell it today you would lose (120.00) from holding La Z Boy Incorporated or give up 2.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Corporate Travel Management  vs.  La Z Boy Incorporated

Corporate Travel Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporate Travel Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

La Z Boy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in La Z Boy Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, La Z reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corporate Travel and La Z

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

The idea behind Corporate Travel Management and La Z Boy Incorporated 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.