Correlation Between Hooker Furniture and PHILIP

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

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

Diversification Opportunities for Hooker Furniture and PHILIP

0.35

Correlation Coefficient

Hooker Furniture  PHILIP

Weak diversification

The 3 months correlation between Hooker and PHILIP is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and PHILIP MORRIS INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHILIP MORRIS INTL and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with PHILIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHILIP MORRIS INTL has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and PHILIP go up and down completely randomly.

Pair Corralation between Hooker Furniture and PHILIP

Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the PHILIP. In addition to that, Hooker Furniture is 3.05 times more volatile than PHILIP MORRIS INTL. It trades about -0.09 of its total potential returns per unit of risk. PHILIP MORRIS INTL is currently generating about -0.21 per unit of volatility. If you would invest  9,931  in PHILIP MORRIS INTL on September 26, 2024 and sell it today you would lose (1,312) from holding PHILIP MORRIS INTL or give up 13.21% of portfolio value over 90 days.

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

Hooker Furniture  vs.  PHILIP MORRIS INTL

Hooker Furniture

Risk-Adjusted Performance

0 of 100

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PHILIP MORRIS INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHILIP MORRIS INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for PHILIP MORRIS INTL investors.

Pair Trading with Hooker Furniture and PHILIP

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

The idea behind Hooker Furniture and PHILIP MORRIS INTL 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.