Correlation Between Yokohama Rubber and Haverty Furniture

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Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber and Haverty 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 Yokohama Rubber and Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Yokohama Rubber and Haverty Furniture Companies, you can compare the effects of market volatilities on Yokohama Rubber and Haverty 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 Yokohama Rubber with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and Haverty Furniture.

Diversification Opportunities for Yokohama Rubber and Haverty Furniture

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Yokohama and Haverty is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture and Yokohama Rubber 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 The Yokohama Rubber are associated (or correlated) with Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and Haverty Furniture go up and down completely randomly.

Pair Corralation between Yokohama Rubber and Haverty Furniture

Assuming the 90 days trading horizon The Yokohama Rubber is expected to under-perform the Haverty Furniture. But the stock apears to be less risky and, when comparing its historical volatility, The Yokohama Rubber is 1.22 times less risky than Haverty Furniture. The stock trades about -0.04 of its potential returns per unit of risk. The Haverty Furniture Companies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,100  in Haverty Furniture Companies on October 26, 2024 and sell it today you would earn a total of  60.00  from holding Haverty Furniture Companies or generate 2.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

The Yokohama Rubber  vs.  Haverty Furniture Companies

 Performance 
       Timeline  
Yokohama Rubber 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Yokohama Rubber may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Haverty Furniture 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Haverty Furniture is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Yokohama Rubber and Haverty Furniture Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yokohama Rubber and Haverty Furniture

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

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