Correlation Between MillerKnoll and Lovesac

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

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

Diversification Opportunities for MillerKnoll and Lovesac

-0.48

Correlation Coefficient

MillerKnoll  Lovesac

Very good diversification

The 3 months correlation between MillerKnoll and Lovesac is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding MillerKnoll and The Lovesac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lovesac and MillerKnoll 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 MillerKnoll are associated (or correlated) with Lovesac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lovesac has no effect on the direction of MillerKnoll i.e., MillerKnoll and Lovesac go up and down completely randomly.

Pair Corralation between MillerKnoll and Lovesac

Given the investment horizon of 90 days MillerKnoll is expected to generate 2.11 times less return on investment than Lovesac. But when comparing it to its historical volatility, MillerKnoll is 1.85 times less risky than Lovesac. It trades about 0.33 of its potential returns per unit of risk. The Lovesac is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  2,916  in The Lovesac on September 1, 2024 and sell it today you would earn a total of  856.00  from holding The Lovesac or generate 29.36% return on investment over 90 days.

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

MillerKnoll  vs.  The Lovesac

MillerKnoll

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MillerKnoll has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Lovesac

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Lovesac are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lovesac exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MillerKnoll and Lovesac

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

The idea behind MillerKnoll and The Lovesac 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.