Correlation Between Bill and Haverty Furniture

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

By analyzing existing cross correlation between Bill Com Holdings and Haverty Furniture Companies, you can compare the effects of market volatilities on Bill 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 Bill with a short position of Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bill and Haverty Furniture.

Diversification Opportunities for Bill and Haverty Furniture

-0.65

Correlation Coefficient

Bill  Haverty Furniture

Excellent diversification

The 3 months correlation between Bill and Haverty is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture and Bill 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 Bill Com Holdings 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 Bill i.e., Bill and Haverty Furniture go up and down completely randomly.

Pair Corralation between Bill and Haverty Furniture

Given the investment horizon of 90 days Bill Com Holdings is expected to generate 1.61 times more return on investment than Haverty Furniture. However, Bill is 1.61 times more volatile than Haverty Furniture Companies. It trades about 0.27 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about -0.08 per unit of risk. If you would invest  5,075  in Bill Com Holdings on September 15, 2024 and sell it today you would earn a total of  3,709  from holding Bill Com Holdings or generate 73.08% return on investment over 90 days.

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

Bill Com Holdings  vs.  Haverty Furniture Companies

Bill Com Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Haverty Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bill and Haverty Furniture

The main advantage of trading using opposite Bill and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bill 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 Bill Com Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.