Correlation Between Tile Shop and Live Ventures

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

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

Diversification Opportunities for Tile Shop and Live Ventures

0.42

Correlation Coefficient

Tile Shop  Live Ventures

Very weak diversification

The 3 months correlation between Tile and Live is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tile Shop Holdings and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures and Tile Shop 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 Tile Shop Holdings are associated (or correlated) with Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of Tile Shop i.e., Tile Shop and Live Ventures go up and down completely randomly.

Pair Corralation between Tile Shop and Live Ventures

Given the investment horizon of 90 days Tile Shop Holdings is expected to generate 0.63 times more return on investment than Live Ventures. However, Tile Shop Holdings is 1.59 times less risky than Live Ventures. It trades about -0.03 of its potential returns per unit of risk. Live Ventures is currently generating about -0.17 per unit of risk. If you would invest  687.00  in Tile Shop Holdings on December 27, 2024 and sell it today you would lose (32.00) from holding Tile Shop Holdings or give up 4.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Tile Shop Holdings  vs.  Live Ventures

Tile Shop Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tile Shop Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Tile Shop is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Live Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Tile Shop and Live Ventures

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

The idea behind Tile Shop Holdings and Live Ventures 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.