Correlation Between Crown Crafts and La Z

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

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

Diversification Opportunities for Crown Crafts and La Z

0.66

Correlation Coefficient

Crown Crafts  La Z

Poor diversification

The 3 months correlation between Crown and LZB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Crown Crafts 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 Crown Crafts 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 Crown Crafts 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 Crown Crafts i.e., Crown Crafts and La Z go up and down completely randomly.

Pair Corralation between Crown Crafts and La Z

Given the investment horizon of 90 days Crown Crafts is expected to under-perform the La Z. But the stock apears to be less risky and, when comparing its historical volatility, Crown Crafts is 1.63 times less risky than La Z. The stock trades about -0.18 of its potential returns per unit of risk. The La Z Boy Incorporated is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  4,384  in La Z Boy Incorporated on December 26, 2024 and sell it today you would lose (436.00) from holding La Z Boy Incorporated or give up 9.95% of portfolio value over 90 days.

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

Crown Crafts  vs.  La Z Boy Incorporated

Crown Crafts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Crafts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

La Z Boy

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 weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Crown Crafts and La Z

The main advantage of trading using opposite Crown Crafts and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Crafts 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 Crown Crafts 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 CEOs Directory module to screen CEOs from public companies around the world.