Correlation Between La-Z-Boy Incorporated and Fortune Brands

Can any of the company-specific risk be diversified away by investing in both La-Z-Boy Incorporated and Fortune 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 La-Z-Boy Incorporated and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between La Z Boy Incorporated and Fortune Brands Home, you can compare the effects of market volatilities on La-Z-Boy Incorporated and Fortune 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 La-Z-Boy Incorporated with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of La-Z-Boy Incorporated and Fortune Brands.

Diversification Opportunities for La-Z-Boy Incorporated and Fortune Brands

0.0

Correlation Coefficient

La-Z-Boy Incorporated  Fortune Brands

Pay attention - limited upside

The 3 months correlation between La-Z-Boy and Fortune is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and La-Z-Boy Incorporated 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 La Z Boy Incorporated are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of La-Z-Boy Incorporated i.e., La-Z-Boy Incorporated and Fortune Brands go up and down completely randomly.

Pair Corralation between La-Z-Boy Incorporated and Fortune Brands

If you would invest  0.00  in Fortune Brands Home on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Fortune Brands Home or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

La Z Boy Incorporated  vs.  Fortune Brands Home

La-Z-Boy Incorporated

Risk-Adjusted Performance

Very Weak

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

Fortune Brands Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortune Brands Home has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fortune Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with La-Z-Boy Incorporated and Fortune Brands

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

The idea behind La Z Boy Incorporated and Fortune Brands Home 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.