Correlation Between Hooker Furniture and CONSOLIDATED

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

By analyzing existing cross correlation between Hooker Furniture and CONSOLIDATED EDISON N, you can compare the effects of market volatilities on Hooker Furniture and CONSOLIDATED 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 CONSOLIDATED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and CONSOLIDATED.

Diversification Opportunities for Hooker Furniture and CONSOLIDATED

-0.11

Correlation Coefficient

Hooker Furniture  CONSOLIDATED

Good diversification

The 3 months correlation between Hooker and CONSOLIDATED is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Hooker Furniture and CONSOLIDATED

Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the CONSOLIDATED. In addition to that, Hooker Furniture is 3.53 times more volatile than CONSOLIDATED EDISON N. It trades about -0.06 of its total potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about 0.1 per unit of volatility. If you would invest  9,687  in CONSOLIDATED EDISON N on September 18, 2024 and sell it today you would earn a total of  75.00  from holding CONSOLIDATED EDISON N or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Hooker Furniture  vs.  CONSOLIDATED EDISON N

Hooker Furniture

Risk-Adjusted Performance

0 of 100

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 comparatively stable technical and fundamental indicators, Hooker Furniture is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSOLIDATED EDISON N investors.

Pair Trading with Hooker Furniture and CONSOLIDATED

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

The idea behind Hooker Furniture and CONSOLIDATED EDISON N 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.