Correlation Between EAST SIDE and La-Z-Boy Incorporated

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

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

Diversification Opportunities for EAST SIDE and La-Z-Boy Incorporated

0.54

Correlation Coefficient

EAST SIDE  La-Z-Boy Incorporated

Very weak diversification

The 3 months correlation between EAST and La-Z-Boy is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding EAST SIDE GAMES 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 Incorporated and EAST SIDE 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 EAST SIDE GAMES are associated (or correlated) with La-Z-Boy Incorporated. 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 Incorporated has no effect on the direction of EAST SIDE i.e., EAST SIDE and La-Z-Boy Incorporated go up and down completely randomly.

Pair Corralation between EAST SIDE and La-Z-Boy Incorporated

Assuming the 90 days horizon EAST SIDE GAMES is expected to generate 3.48 times more return on investment than La-Z-Boy Incorporated. However, EAST SIDE is 3.48 times more volatile than La Z Boy Incorporated. It trades about -0.02 of its potential returns per unit of risk. La Z Boy Incorporated is currently generating about -0.09 per unit of risk. If you would invest  33.00  in EAST SIDE GAMES on December 28, 2024 and sell it today you would lose (7.00) from holding EAST SIDE GAMES or give up 21.21% of portfolio value over 90 days.

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

EAST SIDE GAMES  vs.  La Z Boy Incorporated

EAST SIDE GAMES

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAST SIDE GAMES 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.

La-Z-Boy Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days La Z Boy Incorporated 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 EAST SIDE and La-Z-Boy Incorporated

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

The idea behind EAST SIDE GAMES 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.

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 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.