Correlation Between Haverty Furniture and Advance Auto

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

By analyzing existing cross correlation between Haverty Furniture Companies and Advance Auto Parts, you can compare the effects of market volatilities on Haverty Furniture and Advance Auto 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 Haverty Furniture with a short position of Advance Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haverty Furniture and Advance Auto.

Diversification Opportunities for Haverty Furniture and Advance Auto

0.41

Correlation Coefficient

Haverty Furniture  Advance Auto

Very weak diversification

The 3 months correlation between Haverty and Advance is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts and Haverty Furniture 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 Haverty Furniture Companies are associated (or correlated) with Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and Advance Auto go up and down completely randomly.

Pair Corralation between Haverty Furniture and Advance Auto

Considering the 90-day investment horizon Haverty Furniture Companies is expected to generate 0.48 times more return on investment than Advance Auto. However, Haverty Furniture Companies is 2.1 times less risky than Advance Auto. It trades about -0.07 of its potential returns per unit of risk. Advance Auto Parts is currently generating about -0.05 per unit of risk. If you would invest  2,914  in Haverty Furniture Companies on March 5, 2024 and sell it today you would lose (73.00) from holding Haverty Furniture Companies or give up 2.51% of portfolio value over 90 days.

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

Haverty Furniture Companies  vs.  Advance Auto Parts

Haverty Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Advance Auto Parts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Advance Auto is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Haverty Furniture and Advance Auto

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

The idea behind Haverty Furniture Companies and Advance Auto Parts 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.