Correlation Between Purple Innovation and MillerKnoll

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

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

Diversification Opportunities for Purple Innovation and MillerKnoll

0.82

Correlation Coefficient

Purple Innovation  MillerKnoll

Very poor diversification

The 3 months correlation between Purple and MillerKnoll is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Purple Innovation and MillerKnoll in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MillerKnoll and Purple Innovation 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 Purple Innovation are associated (or correlated) with MillerKnoll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MillerKnoll has no effect on the direction of Purple Innovation i.e., Purple Innovation and MillerKnoll go up and down completely randomly.

Pair Corralation between Purple Innovation and MillerKnoll

Given the investment horizon of 90 days Purple Innovation is expected to generate 1.35 times less return on investment than MillerKnoll. In addition to that, Purple Innovation is 2.33 times more volatile than MillerKnoll. It trades about 0.1 of its total potential returns per unit of risk. MillerKnoll is currently generating about 0.33 per unit of volatility. If you would invest  2,220  in MillerKnoll on September 1, 2024 and sell it today you would earn a total of  294.00  from holding MillerKnoll or generate 13.24% return on investment over 90 days.

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

Purple Innovation  vs.  MillerKnoll

Purple Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Purple Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with Purple Innovation and MillerKnoll

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

The idea behind Purple Innovation and MillerKnoll 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.