Correlation Between Leggett Platt and La Z
Can any of the company-specific risk be diversified away by investing in both Leggett Platt and La Z 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 Leggett Platt and La Z into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leggett Platt Incorporated and La Z Boy Incorporated, you can compare the effects of market volatilities on Leggett Platt and La Z 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 Leggett Platt with a short position of La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggett Platt and La Z.
Diversification Opportunities for Leggett Platt and La Z
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Leggett and LZB is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Z Boy and Leggett Platt 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 Leggett Platt Incorporated are associated (or correlated) with La Z. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Z Boy has no effect on the direction of Leggett Platt i.e., Leggett Platt and La Z go up and down completely randomly.
Pair Corralation between Leggett Platt and La Z
Considering the 90-day investment horizon Leggett Platt Incorporated is expected to under-perform the La Z. But the stock apears to be less risky and, when comparing its historical volatility, Leggett Platt Incorporated is 1.18 times less risky than La Z. The stock trades about -0.05 of its potential returns per unit of risk. The La Z Boy Incorporated is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,526 in La Z Boy Incorporated on January 26, 2024 and sell it today you would earn a total of 878.00 from holding La Z Boy Incorporated or generate 34.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggett Platt Incorporated vs. La Z Boy Incorporated
Performance |
| Timeline |
| Leggett Platt rporated |
| La Z Boy |
Leggett Platt and La Z Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggett Platt and La Z
The main advantage of trading using opposite Leggett Platt and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggett Platt position performs unexpectedly, La Z 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 La Z will offset losses from the drop in La Z's long position.| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
| La Z vs. Flexsteel Industries | La Z vs. Crown Crafts | La Z vs. Bassett Furniture Industries | La Z vs. Hamilton Beach Brands |
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 Stocks Directory module to find actively traded stocks across global markets.
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