Correlation Between Hooker Furniture and Pool

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

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

Diversification Opportunities for Hooker Furniture and Pool

0.42

Correlation Coefficient

Hooker Furniture  Pool

Very weak diversification

The 3 months correlation between Hooker and Pool is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Pool go up and down completely randomly.

Pair Corralation between Hooker Furniture and Pool

Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the Pool. In addition to that, Hooker Furniture is 1.22 times more volatile than Pool Corporation. It trades about -0.17 of its total potential returns per unit of risk. Pool Corporation is currently generating about -0.07 per unit of volatility. If you would invest  34,782  in Pool Corporation on December 20, 2024 and sell it today you would lose (2,560) from holding Pool Corporation or give up 7.36% of portfolio value over 90 days.

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

Hooker Furniture  vs.  Pool Corp.

Hooker Furniture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hooker Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental 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.

Pool

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pool Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Hooker Furniture and Pool

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

The idea behind Hooker Furniture and Pool Corporation 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.