Correlation Between LL Flooring and Floor Decor
Can any of the company-specific risk be diversified away by investing in both LL Flooring and Floor Decor 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 LL Flooring and Floor Decor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LL Flooring Holdings and Floor Decor Holdings, you can compare the effects of market volatilities on LL Flooring and Floor Decor 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 LL Flooring with a short position of Floor Decor. Check out your portfolio center. Please also check ongoing floating volatility patterns of LL Flooring and Floor Decor.
Diversification Opportunities for LL Flooring and Floor Decor
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LL Flooring and Floor is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding LL Flooring Holdings and Floor Decor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floor Decor Holdings and LL Flooring 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 LL Flooring Holdings are associated (or correlated) with Floor Decor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floor Decor Holdings has no effect on the direction of LL Flooring i.e., LL Flooring and Floor Decor go up and down completely randomly.
Pair Corralation between LL Flooring and Floor Decor
Allowing for the 90-day total investment horizon LL Flooring Holdings is expected to under-perform the Floor Decor. But the stock apears to be less risky and, when comparing its historical volatility, LL Flooring Holdings is 1.13 times less risky than Floor Decor. The stock trades about -0.47 of its potential returns per unit of risk. The Floor Decor Holdings is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest 12,739 in Floor Decor Holdings on January 24, 2024 and sell it today you would lose (1,742) from holding Floor Decor Holdings or give up 13.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LL Flooring Holdings vs. Floor Decor Holdings
Performance |
| Timeline |
| LL Flooring Holdings |
| Floor Decor Holdings |
LL Flooring and Floor Decor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LL Flooring and Floor Decor
The main advantage of trading using opposite LL Flooring and Floor Decor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LL Flooring position performs unexpectedly, Floor Decor 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 Floor Decor will offset losses from the drop in Floor Decor's long position.| LL Flooring vs. Arhaus Inc | LL Flooring vs. Haverty Furniture Companies | LL Flooring vs. Kirklands | LL Flooring vs. Live Ventures |
| Floor Decor vs. Arhaus Inc | Floor Decor vs. Haverty Furniture Companies | Floor Decor vs. Kirklands | Floor Decor vs. Live Ventures |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |