Correlation Between 62954HAL2 and Hooker Furniture

Can any of the company-specific risk be diversified away by investing in both 62954HAL2 and Hooker Furniture 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 62954HAL2 and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NXPI 3125 15 FEB 42 and Hooker Furniture, you can compare the effects of market volatilities on 62954HAL2 and Hooker Furniture 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 62954HAL2 with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of 62954HAL2 and Hooker Furniture.

Diversification Opportunities for 62954HAL2 and Hooker Furniture

0.71

Correlation Coefficient

62954HAL2  Hooker Furniture

Poor diversification

The 3 months correlation between 62954HAL2 and Hooker is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NXPI 3125 15 FEB 42 and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and 62954HAL2 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 NXPI 3125 15 FEB 42 are associated (or correlated) with Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of 62954HAL2 i.e., 62954HAL2 and Hooker Furniture go up and down completely randomly.

Pair Corralation between 62954HAL2 and Hooker Furniture

Assuming the 90 days trading horizon NXPI 3125 15 FEB 42 is expected to generate 0.53 times more return on investment than Hooker Furniture. However, NXPI 3125 15 FEB 42 is 1.89 times less risky than Hooker Furniture. It trades about -0.02 of its potential returns per unit of risk. Hooker Furniture is currently generating about -0.21 per unit of risk. If you would invest  7,316  in NXPI 3125 15 FEB 42 on December 4, 2024 and sell it today you would lose (102.00) from holding NXPI 3125 15 FEB 42 or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	66.1%
Values	Daily Returns

NXPI 3125 15 FEB 42  vs.  Hooker Furniture

NXPI 3125 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days NXPI 3125 15 FEB 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 62954HAL2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hooker Furniture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hooker Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with 62954HAL2 and Hooker Furniture

The main advantage of trading using opposite 62954HAL2 and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 62954HAL2 position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.

The idea behind NXPI 3125 15 FEB 42 and Hooker Furniture 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.