Correlation Between Aterian and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Aterian 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 Aterian and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aterian and Bassett Furniture Industries, you can compare the effects of market volatilities on Aterian 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 Aterian with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aterian and Bassett Furniture.
Diversification Opportunities for Aterian and Bassett Furniture
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aterian and Bassett is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Aterian 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 Aterian 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 Aterian i.e., Aterian and Bassett Furniture go up and down completely randomly.
Pair Corralation between Aterian and Bassett Furniture
Given the investment horizon of 90 days Aterian is expected to under-perform the Bassett Furniture. In addition to that, Aterian is 2.78 times more volatile than Bassett Furniture Industries. It trades about -0.04 of its total potential returns per unit of risk. Bassett Furniture Industries is currently generating about -0.01 per unit of volatility. If you would invest 1,691 in Bassett Furniture Industries on October 10, 2024 and sell it today you would lose (306.00) from holding Bassett Furniture Industries or give up 18.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aterian vs. Bassett Furniture Industries
Performance |
| Timeline |
| Aterian |
| Bassett Furniture |
Aterian and Bassett Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aterian and Bassett Furniture
The main advantage of trading using opposite Aterian and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aterian 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.The idea behind Aterian and Bassett Furniture Industries 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.| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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