Correlation Between Lovesac and Mohawk Industries
Can any of the company-specific risk be diversified away by investing in both Lovesac and Mohawk Industries 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 Mohawk Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Lovesac and Mohawk Industries, you can compare the effects of market volatilities on Lovesac and Mohawk Industries 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 Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lovesac and Mohawk Industries.
Diversification Opportunities for Lovesac and Mohawk Industries
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lovesac and Mohawk is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Lovesac and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk Industries 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 Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of Lovesac i.e., Lovesac and Mohawk Industries go up and down completely randomly.
Pair Corralation between Lovesac and Mohawk Industries
Given the investment horizon of 90 days The Lovesac is expected to generate 1.67 times more return on investment than Mohawk Industries. However, Lovesac is 1.67 times more volatile than Mohawk Industries. It trades about 0.05 of its potential returns per unit of risk. Mohawk Industries is currently generating about 0.05 per unit of risk. If you would invest 2,119 in The Lovesac on February 22, 2024 and sell it today you would earn a total of 605.00 from holding The Lovesac or generate 28.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.6% |
Values | Daily Returns |
The Lovesac vs. Mohawk Industries
Performance |
Timeline |
Lovesac |
Mohawk Industries |
Lovesac and Mohawk Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lovesac and Mohawk Industries
The main advantage of trading using opposite Lovesac and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lovesac position performs unexpectedly, Mohawk Industries 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.Lovesac vs. Tempur Sealy International | Lovesac vs. La Z Boy Incorporated | Lovesac vs. Purple Innovation | Lovesac vs. MasterBrand |
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Check out your portfolio center.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.
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