Correlation Between Sprinklr and La Z

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

By analyzing existing cross correlation between Sprinklr and La Z Boy Incorporated, you can compare the effects of market volatilities on Sprinklr 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 Sprinklr with a short position of La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprinklr and La Z.

Diversification Opportunities for Sprinklr and La Z

0.73

Correlation Coefficient

Sprinklr  La Z

Poor diversification

The 3 months correlation between Sprinklr and LZB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sprinklr 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 Sprinklr 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 Sprinklr 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 Sprinklr i.e., Sprinklr and La Z go up and down completely randomly.

Pair Corralation between Sprinklr and La Z

Considering the 90-day investment horizon Sprinklr is expected to under-perform the La Z. In addition to that, Sprinklr is 1.08 times more volatile than La Z Boy Incorporated. It trades about -0.17 of its total potential returns per unit of risk. La Z Boy Incorporated is currently generating about -0.17 per unit of volatility. If you would invest  3,670  in La Z Boy Incorporated on January 26, 2024 and sell it today you would lose (231.00) from holding La Z Boy Incorporated or give up 6.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sprinklr  vs.  La Z Boy Incorporated

Sprinklr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprinklr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sprinklr is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

La Z Boy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sprinklr and La Z

The main advantage of trading using opposite Sprinklr and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprinklr 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.

The idea behind Sprinklr and La Z Boy Incorporated 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.