Correlation Between Leggett Platt and Kirklands

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

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

Diversification Opportunities for Leggett Platt and Kirklands

0.72

Correlation Coefficient

Leggett Platt  Kirklands

Poor diversification

The 3 months correlation between Leggett and Kirklands is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and Kirklands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirklands and Leggett Platt 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 Leggett Platt Incorporated are associated (or correlated) with Kirklands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirklands has no effect on the direction of Leggett Platt i.e., Leggett Platt and Kirklands go up and down completely randomly.

Pair Corralation between Leggett Platt and Kirklands

Considering the 90-day investment horizon Leggett Platt Incorporated is expected to generate 0.81 times more return on investment than Kirklands. However, Leggett Platt Incorporated is 1.24 times less risky than Kirklands. It trades about -0.1 of its potential returns per unit of risk. Kirklands is currently generating about -0.12 per unit of risk. If you would invest  944.00  in Leggett Platt Incorporated on December 29, 2024 and sell it today you would lose (146.00) from holding Leggett Platt Incorporated or give up 15.47% of portfolio value over 90 days.

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

Leggett Platt Incorporated  vs.  Kirklands

Leggett Platt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leggett Platt Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kirklands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kirklands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Leggett Platt and Kirklands

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

The idea behind Leggett Platt Incorporated and Kirklands 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.