Correlation Between Lovesac and Kimball International

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

By analyzing existing cross correlation between The Lovesac and Kimball International, you can compare the effects of market volatilities on Lovesac and Kimball International 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 Lovesac with a short position of Kimball International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lovesac and Kimball International.

Diversification Opportunities for Lovesac and Kimball International

0.26

Correlation Coefficient

Lovesac  Kimball International

Modest diversification

The 3 months correlation between Lovesac and Kimball is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Lovesac and Kimball International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball International and Lovesac 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 Lovesac are associated (or correlated) with Kimball International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimball International has no effect on the direction of Lovesac i.e., Lovesac and Kimball International go up and down completely randomly.

Pair Corralation between Lovesac and Kimball International

If you would invest  2,257  in The Lovesac on September 2, 2024 and sell it today you would earn a total of  1,515  from holding The Lovesac or generate 67.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

The Lovesac  vs.  Kimball International

Lovesac

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Lovesac are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lovesac exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kimball International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimball International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kimball International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Lovesac and Kimball International

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

The idea behind The Lovesac and Kimball International 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.