Correlation Between Tile Shop and Haverty Furniture

Can any of the company-specific risk be diversified away by investing in both Tile Shop 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 Tile Shop and Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tile Shop Holdings and Haverty Furniture Companies, you can compare the effects of market volatilities on Tile Shop 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 Tile Shop with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tile Shop and Haverty Furniture.

Diversification Opportunities for Tile Shop and Haverty Furniture

-0.48

Correlation Coefficient

Tile Shop  Haverty Furniture

Very good diversification

The 3 months correlation between Tile and Haverty is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tile Shop 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 Tile Shop 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 Tile Shop 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 Tile Shop i.e., Tile Shop and Haverty Furniture go up and down completely randomly.

Pair Corralation between Tile Shop and Haverty Furniture

Assuming the 90 days horizon Tile Shop Holdings is expected to generate 0.65 times more return on investment than Haverty Furniture. However, Tile Shop Holdings is 1.53 times less risky than Haverty Furniture. It trades about 0.41 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about 0.0 per unit of risk. If you would invest  575.00  in Tile Shop Holdings on September 22, 2024 and sell it today you would earn a total of  85.00  from holding Tile Shop Holdings or generate 14.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tile Shop Holdings  vs.  Haverty Furniture Companies

Tile Shop Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tile Shop Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tile Shop reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Tile Shop and Haverty Furniture

The main advantage of trading using opposite Tile Shop and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tile Shop 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 Tile Shop 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..