Correlation Between Addus HomeCare and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Bassett Furniture 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 Addus HomeCare and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Bassett Furniture Industries, you can compare the effects of market volatilities on Addus HomeCare and Bassett Furniture 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 Addus HomeCare with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Bassett Furniture.
Diversification Opportunities for Addus HomeCare and Bassett Furniture
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and Bassett is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Addus HomeCare 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 Addus HomeCare are associated (or correlated) with Bassett Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassett Furniture has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Bassett Furniture go up and down completely randomly.
Pair Corralation between Addus HomeCare and Bassett Furniture
Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Bassett Furniture. In addition to that, Addus HomeCare is 1.18 times more volatile than Bassett Furniture Industries. It trades about -0.07 of its total potential returns per unit of risk. Bassett Furniture Industries is currently generating about 0.22 per unit of volatility. If you would invest 1,389 in Bassett Furniture Industries on August 31, 2024 and sell it today you would earn a total of 119.00 from holding Bassett Furniture Industries or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Bassett Furniture Industries
Performance |
| Timeline |
| Addus HomeCare |
| Bassett Furniture |
Addus HomeCare and Bassett Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Bassett Furniture
The main advantage of trading using opposite Addus HomeCare and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Bassett Furniture 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 Bassett Furniture will offset losses from the drop in Bassett Furniture's long position.| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
| Bassett Furniture vs. Hooker Furniture | Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Haverty Furniture Companies | Bassett Furniture vs. La Z Boy Incorporated |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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