Correlation Between Alliance Entertainment and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Alliance Entertainment and Hooker 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 Alliance Entertainment and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Entertainment Holding and Hooker Furniture, you can compare the effects of market volatilities on Alliance Entertainment and Hooker 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 Alliance Entertainment with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Entertainment and Hooker Furniture.
Diversification Opportunities for Alliance Entertainment and Hooker Furniture
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alliance and Hooker is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Entertainment Holding and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Alliance Entertainment 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 Alliance Entertainment Holding are associated (or correlated) with Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Alliance Entertainment i.e., Alliance Entertainment and Hooker Furniture go up and down completely randomly.
Pair Corralation between Alliance Entertainment and Hooker Furniture
Given the investment horizon of 90 days Alliance Entertainment Holding is expected to generate 2.91 times more return on investment than Hooker Furniture. However, Alliance Entertainment is 2.91 times more volatile than Hooker Furniture. It trades about 0.21 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.04 per unit of risk. If you would invest 240.00 in Alliance Entertainment Holding on September 14, 2024 and sell it today you would earn a total of 370.00 from holding Alliance Entertainment Holding or generate 154.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alliance Entertainment Holding vs. Hooker Furniture
Performance |
Timeline |
Alliance Entertainment |
Hooker Furniture |
Alliance Entertainment and Hooker Furniture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alliance Entertainment and Hooker Furniture
The main advantage of trading using opposite Alliance Entertainment and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Entertainment position performs unexpectedly, Hooker 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.Alliance Entertainment vs. Hooker Furniture | Alliance Entertainment vs. Ryanair Holdings PLC | Alliance Entertainment vs. Coursera | Alliance Entertainment vs. Mesa Air Group |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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