Correlation Between Haverty Furniture and American

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

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

Diversification Opportunities for Haverty Furniture and American

0.31

Correlation Coefficient

Haverty Furniture  American

Weak diversification

The 3 months correlation between Haverty and American is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Haverty 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 Haverty Furniture Companies are associated (or correlated) with American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and American go up and down completely randomly.

Pair Corralation between Haverty Furniture and American

Considering the 90-day investment horizon Haverty Furniture Companies is expected to under-perform the American. In addition to that, Haverty Furniture is 4.83 times more volatile than American Express Co. It trades about -0.05 of its total potential returns per unit of risk. American Express Co is currently generating about -0.12 per unit of volatility. If you would invest  9,496  in American Express Co on September 12, 2024 and sell it today you would lose (322.00) from holding American Express Co or give up 3.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Haverty Furniture Companies  vs.  American Express Co

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 weak 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.

American Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Express Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, American is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Haverty Furniture and American

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

The idea behind Haverty Furniture Companies and American Express Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.