Correlation Between LEONS FURNITURE and Williams Companies

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

By analyzing existing cross correlation between LEONS FURNITURE and The Williams Companies, you can compare the effects of market volatilities on LEONS FURNITURE and Williams Companies 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 LEONS FURNITURE with a short position of Williams Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEONS FURNITURE and Williams Companies.

Diversification Opportunities for LEONS FURNITURE and Williams Companies

0.01

Correlation Coefficient

LEONS FURNITURE  Williams Companies

Significant diversification

The 3 months correlation between LEONS and Williams is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LEONS FURNITURE and The Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Williams Companies and LEONS 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 LEONS FURNITURE are associated (or correlated) with Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Williams Companies has no effect on the direction of LEONS FURNITURE i.e., LEONS FURNITURE and Williams Companies go up and down completely randomly.

Pair Corralation between LEONS FURNITURE and Williams Companies

Assuming the 90 days horizon LEONS FURNITURE is expected to generate 1.21 times more return on investment than Williams Companies. However, LEONS FURNITURE is 1.21 times more volatile than The Williams Companies. It trades about 0.14 of its potential returns per unit of risk. The Williams Companies is currently generating about -0.03 per unit of risk. If you would invest  1,430  in LEONS FURNITURE on April 23, 2025 and sell it today you would earn a total of  250.00  from holding LEONS FURNITURE or generate 17.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

LEONS FURNITURE  vs.  The Williams Companies

LEONS FURNITURE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LEONS FURNITURE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LEONS FURNITURE reported solid returns over the last few months and may actually be approaching a breakup point.

The Williams Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Williams Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Williams Companies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LEONS FURNITURE and Williams Companies

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

The idea behind LEONS FURNITURE and The Williams Companies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.