Correlation Between La Z and Hamilton Beach

Can any of the company-specific risk be diversified away by investing in both La Z and Hamilton Beach 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 and Hamilton Beach 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 Hamilton Beach Brands, you can compare the effects of market volatilities on La Z and Hamilton Beach 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 with a short position of Hamilton Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and Hamilton Beach.

Diversification Opportunities for La Z and Hamilton Beach

-0.61

Correlation Coefficient

La Z  Hamilton Beach

Excellent diversification

The 3 months correlation between LZB and Hamilton is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and Hamilton Beach Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Beach Brands and La Z 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 Hamilton Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Beach Brands has no effect on the direction of La Z i.e., La Z and Hamilton Beach go up and down completely randomly.

Pair Corralation between La Z and Hamilton Beach

Considering the 90-day investment horizon La Z Boy Incorporated is expected to under-perform the Hamilton Beach. But the stock apears to be less risky and, when comparing its historical volatility, La Z Boy Incorporated is 1.53 times less risky than Hamilton Beach. The stock trades about -0.05 of its potential returns per unit of risk. The Hamilton Beach Brands is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,650  in Hamilton Beach Brands on December 28, 2024 and sell it today you would earn a total of  323.00  from holding Hamilton Beach Brands or generate 19.58% return on investment over 90 days.

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

La Z Boy Incorporated  vs.  Hamilton Beach Brands

La Z Boy

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 weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hamilton Beach Brands

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Beach Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Hamilton Beach sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with La Z and Hamilton Beach

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

The idea behind La Z Boy Incorporated and Hamilton Beach Brands 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.