Correlation Between Apogee Enterprises and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises 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 Apogee Enterprises and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apogee Enterprises and Bassett Furniture Industries, you can compare the effects of market volatilities on Apogee Enterprises 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 Apogee Enterprises with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and Bassett Furniture.
Diversification Opportunities for Apogee Enterprises and Bassett Furniture
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apogee and Bassett is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Apogee Enterprises 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 Apogee Enterprises 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 Apogee Enterprises i.e., Apogee Enterprises and Bassett Furniture go up and down completely randomly.
Pair Corralation between Apogee Enterprises and Bassett Furniture
Given the investment horizon of 90 days Apogee Enterprises is expected to generate 1.07 times more return on investment than Bassett Furniture. However, Apogee Enterprises is 1.07 times more volatile than Bassett Furniture Industries. It trades about 0.07 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about 0.01 per unit of risk. If you would invest 4,304 in Apogee Enterprises on September 5, 2024 and sell it today you would earn a total of 4,077 from holding Apogee Enterprises or generate 94.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apogee Enterprises vs. Bassett Furniture Industries
Performance |
| Timeline |
| Apogee Enterprises |
| Bassett Furniture |
Apogee Enterprises and Bassett Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apogee Enterprises and Bassett Furniture
The main advantage of trading using opposite Apogee Enterprises and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises 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.| Apogee Enterprises vs. Quanex Building Products | Apogee Enterprises vs. Janus International Group | Apogee Enterprises vs. Interface | Apogee Enterprises vs. Azek Company |
| Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Crown Crafts | Bassett Furniture vs. MasterBrand | Bassett Furniture vs. MillerKnoll |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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