Correlation Between La-Z-Boy Incorporated and EAST SIDE

Can any of the company-specific risk be diversified away by investing in both La-Z-Boy Incorporated and EAST SIDE 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 EAST SIDE 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 EAST SIDE GAMES, you can compare the effects of market volatilities on La-Z-Boy Incorporated and EAST SIDE 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 EAST SIDE. Check out your portfolio center. Please also check ongoing floating volatility patterns of La-Z-Boy Incorporated and EAST SIDE.

Diversification Opportunities for La-Z-Boy Incorporated and EAST SIDE

0.54

Correlation Coefficient

La-Z-Boy Incorporated  EAST SIDE

Very weak diversification

The 3 months correlation between La-Z-Boy and EAST is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and EAST SIDE GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST SIDE GAMES 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 EAST SIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST SIDE GAMES has no effect on the direction of La-Z-Boy Incorporated i.e., La-Z-Boy Incorporated and EAST SIDE go up and down completely randomly.

Pair Corralation between La-Z-Boy Incorporated and EAST SIDE

Assuming the 90 days horizon La Z Boy Incorporated is expected to under-perform the EAST SIDE. But the stock apears to be less risky and, when comparing its historical volatility, La Z Boy Incorporated is 3.48 times less risky than EAST SIDE. The stock trades about -0.09 of its potential returns per unit of risk. The EAST SIDE GAMES is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  33.00  in EAST SIDE GAMES on December 28, 2024 and sell it today you would lose (7.00) from holding EAST SIDE GAMES or give up 21.21% of portfolio value over 90 days.

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

La Z Boy Incorporated  vs.  EAST SIDE GAMES

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.

EAST SIDE GAMES

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAST SIDE GAMES 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.

Pair Trading with La-Z-Boy Incorporated and EAST SIDE

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

The idea behind La Z Boy Incorporated and EAST SIDE GAMES 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.