Correlation Between Bassett Furniture and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Alaska Air 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 Alaska Air 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 Alaska Air Group, you can compare the effects of market volatilities on Bassett Furniture and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Alaska Air.
Diversification Opportunities for Bassett Furniture and Alaska Air
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bassett and Alaska is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Alaska Air go up and down completely randomly.
Pair Corralation between Bassett Furniture and Alaska Air
Given the investment horizon of 90 days Bassett Furniture is expected to generate 1.34 times less return on investment than Alaska Air. But when comparing it to its historical volatility, Bassett Furniture Industries is 1.26 times less risky than Alaska Air. It trades about 0.2 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,791 in Alaska Air Group on September 1, 2024 and sell it today you would earn a total of 469.00 from holding Alaska Air Group or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Alaska Air Group
Performance |
| Timeline |
| Bassett Furniture |
| Alaska Air Group |
Bassett Furniture and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Alaska Air
The main advantage of trading using opposite Bassett Furniture and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air'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 |
| Alaska Air vs. Canadian Pacific Railway | Alaska Air vs. Volaris | Alaska Air vs. Werner Enterprises | Alaska Air vs. flyExclusive, |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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