Correlation Between LL Flooring and Buckle

Can any of the company-specific risk be diversified away by investing in both LL Flooring and Buckle 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 Buckle 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 Buckle Inc, you can compare the effects of market volatilities on LL Flooring and Buckle 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 Buckle. Check out your portfolio center. Please also check ongoing floating volatility patterns of LL Flooring and Buckle.

Diversification Opportunities for LL Flooring and Buckle

0.69

Correlation Coefficient

LL Flooring  Buckle

Poor diversification

The 3 months correlation between LL Flooring and Buckle is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LL Flooring Holdings and Buckle Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc 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 Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of LL Flooring i.e., LL Flooring and Buckle go up and down completely randomly.

Pair Corralation between LL Flooring and Buckle

Allowing for the 90-day total investment horizon LL Flooring Holdings is expected to generate 1.74 times more return on investment than Buckle. However, LL Flooring is 1.74 times more volatile than Buckle Inc. It trades about -0.02 of its potential returns per unit of risk. Buckle Inc is currently generating about -0.04 per unit of risk. If you would invest  182.00  in LL Flooring Holdings on February 24, 2024 and sell it today you would lose (8.00) from holding LL Flooring Holdings or give up 4.4% of portfolio value over 90 days.

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

LL Flooring Holdings  vs.  Buckle Inc

LL Flooring Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LL Flooring Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Buckle Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buckle Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with LL Flooring and Buckle

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

The idea behind LL Flooring Holdings and Buckle Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.