Correlation Between Alaska Air and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Alaska Air 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 Alaska Air and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and Bassett Furniture Industries, you can compare the effects of market volatilities on Alaska Air 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 Alaska Air with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Bassett Furniture.
Diversification Opportunities for Alaska Air and Bassett Furniture
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alaska and Bassett is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Alaska Air 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 Alaska Air Group 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 Alaska Air i.e., Alaska Air and Bassett Furniture go up and down completely randomly.
Pair Corralation between Alaska Air and Bassett Furniture
Considering the 90-day investment horizon Alaska Air Group is expected to generate 1.2 times more return on investment than Bassett Furniture. However, Alaska Air is 1.2 times more volatile than Bassett Furniture Industries. It trades about 0.26 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about 0.27 per unit of risk. If you would invest 4,710 in Alaska Air Group on August 28, 2024 and sell it today you would earn a total of 583.00 from holding Alaska Air Group or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Bassett Furniture Industries
Performance |
| Timeline |
| Alaska Air Group |
| Bassett Furniture |
Alaska Air and Bassett Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Bassett Furniture
The main advantage of trading using opposite Alaska Air and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air 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.| Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. American Airlines Group | Alaska Air vs. JetBlue Airways Corp |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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