Correlation Between Birks and Haverty Furniture

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

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

Diversification Opportunities for Birks and Haverty Furniture

-0.29

Correlation Coefficient

Birks  Haverty Furniture

Very good diversification

The 3 months correlation between Birks and Haverty is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture and Birks 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 Birks Group 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 Birks i.e., Birks and Haverty Furniture go up and down completely randomly.

Pair Corralation between Birks and Haverty Furniture

Considering the 90-day investment horizon Birks Group is expected to generate 0.72 times more return on investment than Haverty Furniture. However, Birks Group is 1.38 times less risky than Haverty Furniture. It trades about -0.01 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about -0.13 per unit of risk. If you would invest  155.00  in Birks Group on October 10, 2024 and sell it today you would lose (1.00) from holding Birks Group or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.0%
Values	Daily Returns

Birks Group  vs.  Haverty Furniture Companies

Birks Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birks Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Birks and Haverty Furniture

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

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.