Correlation Between Flexsteel Industries and Lifetime Brands

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

By analyzing existing cross correlation between Flexsteel Industries and Lifetime Brands, you can compare the effects of market volatilities on Flexsteel Industries and Lifetime Brands 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 Flexsteel Industries with a short position of Lifetime Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and Lifetime Brands.

Diversification Opportunities for Flexsteel Industries and Lifetime Brands

0.5

Correlation Coefficient

Flexsteel Industries  Lifetime Brands

Very weak diversification

The 3 months correlation between Flexsteel and Lifetime is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Lifetime Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifetime Brands and Flexsteel Industries 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 Flexsteel Industries are associated (or correlated) with Lifetime Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifetime Brands has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and Lifetime Brands go up and down completely randomly.

Pair Corralation between Flexsteel Industries and Lifetime Brands

Given the investment horizon of 90 days Flexsteel Industries is expected to under-perform the Lifetime Brands. In addition to that, Flexsteel Industries is 1.44 times more volatile than Lifetime Brands. It trades about -0.1 of its total potential returns per unit of risk. Lifetime Brands is currently generating about -0.04 per unit of volatility. If you would invest  554.00  in Lifetime Brands on December 30, 2024 and sell it today you would lose (61.00) from holding Lifetime Brands or give up 11.01% of portfolio value over 90 days.

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

Flexsteel Industries  vs.  Lifetime Brands

Flexsteel Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flexsteel Industries 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.

Lifetime Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifetime Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Flexsteel Industries and Lifetime Brands

The main advantage of trading using opposite Flexsteel Industries and Lifetime Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexsteel Industries position performs unexpectedly, Lifetime Brands 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 Lifetime Brands will offset losses from the drop in Lifetime Brands' long position.

The idea behind Flexsteel Industries and Lifetime Brands 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.