Correlation Between Hamilton Beach and Leggett Platt

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

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

Diversification Opportunities for Hamilton Beach and Leggett Platt

0.76

Correlation Coefficient

Hamilton Beach  Leggett Platt

Poor diversification

The 3 months correlation between Hamilton and Leggett is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Beach Brands and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Hamilton Beach 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 Hamilton Beach Brands are associated (or correlated) with Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Hamilton Beach i.e., Hamilton Beach and Leggett Platt go up and down completely randomly.

Pair Corralation between Hamilton Beach and Leggett Platt

Considering the 90-day investment horizon Hamilton Beach Brands is expected to under-perform the Leggett Platt. In addition to that, Hamilton Beach is 1.54 times more volatile than Leggett Platt Incorporated. It trades about -0.31 of its total potential returns per unit of risk. Leggett Platt Incorporated is currently generating about -0.17 per unit of volatility. If you would invest  1,212  in Leggett Platt Incorporated on September 27, 2024 and sell it today you would lose (240.00) from holding Leggett Platt Incorporated or give up 19.8% of portfolio value over 90 days.

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

Hamilton Beach Brands  vs.  Leggett Platt Incorporated

Hamilton Beach Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hamilton Beach Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Leggett Platt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leggett Platt Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hamilton Beach and Leggett Platt

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

The idea behind Hamilton Beach Brands and Leggett Platt 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 Stocks Directory module to find actively traded stocks across global markets.