Correlation Between Bassett Furniture and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Addus HomeCare 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 Bassett Furniture and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bassett Furniture Industries and Addus HomeCare, you can compare the effects of market volatilities on Bassett Furniture and Addus HomeCare 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 Bassett Furniture with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Addus HomeCare.
Diversification Opportunities for Bassett Furniture and Addus HomeCare
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bassett and Addus is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Bassett Furniture 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 Bassett Furniture Industries are associated (or correlated) with Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Addus HomeCare go up and down completely randomly.
Pair Corralation between Bassett Furniture and Addus HomeCare
Given the investment horizon of 90 days Bassett Furniture Industries is expected to generate 0.84 times more return on investment than Addus HomeCare. However, Bassett Furniture Industries is 1.18 times less risky than Addus HomeCare. It trades about 0.22 of its potential returns per unit of risk. Addus HomeCare is currently generating about -0.07 per unit of risk. 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 |
Bassett Furniture Industries vs. Addus HomeCare
Performance |
| Timeline |
| Bassett Furniture |
| Addus HomeCare |
Bassett Furniture and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Addus HomeCare
The main advantage of trading using opposite Bassett Furniture and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.| Bassett Furniture vs. Hooker Furniture | Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Haverty Furniture Companies | Bassett Furniture vs. La Z Boy Incorporated |
| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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