Correlation Between Leggett Platt and Mohawk Industries
Can any of the company-specific risk be diversified away by investing in both Leggett Platt and Mohawk Industries 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 Mohawk Industries 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 Mohawk Industries, you can compare the effects of market volatilities on Leggett Platt and Mohawk Industries 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 Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggett Platt and Mohawk Industries.
Diversification Opportunities for Leggett Platt and Mohawk Industries
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leggett and Mohawk is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk Industries 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 Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of Leggett Platt i.e., Leggett Platt and Mohawk Industries go up and down completely randomly.
Pair Corralation between Leggett Platt and Mohawk Industries
Considering the 90-day investment horizon Leggett Platt Incorporated is expected to under-perform the Mohawk Industries. But the stock apears to be less risky and, when comparing its historical volatility, Leggett Platt Incorporated is 1.02 times less risky than Mohawk Industries. The stock trades about -0.08 of its potential returns per unit of risk. The Mohawk Industries is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8,499 in Mohawk Industries on February 1, 2024 and sell it today you would earn a total of 3,033 from holding Mohawk Industries or generate 35.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Leggett Platt Incorporated vs. Mohawk Industries
Performance |
Timeline |
Leggett Platt rporated |
Mohawk Industries |
Leggett Platt and Mohawk Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leggett Platt and Mohawk Industries
The main advantage of trading using opposite Leggett Platt and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggett Platt position performs unexpectedly, Mohawk Industries 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.Leggett Platt vs. Willis Lease Finance | Leggett Platt vs. Rocky Brands | Leggett Platt vs. First Business Financial |
Mohawk Industries vs. Willis Lease Finance | Mohawk Industries vs. Rocky Brands | Mohawk Industries vs. First Business Financial |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |