Correlation Between HomeToGo and HAVERTY FURNITURE

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

By analyzing existing cross correlation between HomeToGo SE and HAVERTY FURNITURE A, you can compare the effects of market volatilities on HomeToGo and HAVERTY FURNITURE 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 HomeToGo with a short position of HAVERTY FURNITURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and HAVERTY FURNITURE.

Diversification Opportunities for HomeToGo and HAVERTY FURNITURE

-0.22

Correlation Coefficient

HomeToGo  HAVERTY FURNITURE

Very good diversification

The 3 months correlation between HomeToGo and HAVERTY is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and HAVERTY FURNITURE A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVERTY FURNITURE and HomeToGo 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 HomeToGo SE are associated (or correlated) with HAVERTY FURNITURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVERTY FURNITURE has no effect on the direction of HomeToGo i.e., HomeToGo and HAVERTY FURNITURE go up and down completely randomly.

Pair Corralation between HomeToGo and HAVERTY FURNITURE

Assuming the 90 days trading horizon HomeToGo SE is expected to under-perform the HAVERTY FURNITURE. In addition to that, HomeToGo is 1.37 times more volatile than HAVERTY FURNITURE A. It trades about -0.07 of its total potential returns per unit of risk. HAVERTY FURNITURE A is currently generating about 0.05 per unit of volatility. If you would invest  1,990  in HAVERTY FURNITURE A on October 8, 2024 and sell it today you would earn a total of  70.00  from holding HAVERTY FURNITURE A or generate 3.52% return on investment over 90 days.

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

HomeToGo SE  vs.  HAVERTY FURNITURE A

HomeToGo SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeToGo SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, HomeToGo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

HAVERTY FURNITURE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HAVERTY FURNITURE A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HomeToGo and HAVERTY FURNITURE

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

The idea behind HomeToGo SE and HAVERTY FURNITURE A 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.