Correlation Between Bassett Furniture and ESH Acquisition
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and ESH Acquisition 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 ESH Acquisition 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 ESH Acquisition Corp, you can compare the effects of market volatilities on Bassett Furniture and ESH Acquisition 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 ESH Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and ESH Acquisition.
Diversification Opportunities for Bassett Furniture and ESH Acquisition
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bassett and ESH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and ESH Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESH Acquisition Corp 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 ESH Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESH Acquisition Corp has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and ESH Acquisition go up and down completely randomly.
Pair Corralation between Bassett Furniture and ESH Acquisition
Given the investment horizon of 90 days Bassett Furniture is expected to generate 5197.79 times less return on investment than ESH Acquisition. But when comparing it to its historical volatility, Bassett Furniture Industries is 169.09 times less risky than ESH Acquisition. It trades about 0.01 of its potential returns per unit of risk. ESH Acquisition Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 16.00 in ESH Acquisition Corp on November 3, 2024 and sell it today you would lose (7.13) from holding ESH Acquisition Corp or give up 44.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 68.95% |
| Values | Daily Returns |
Bassett Furniture Industries vs. ESH Acquisition Corp
Performance |
| Timeline |
| Bassett Furniture |
| ESH Acquisition Corp |
Bassett Furniture and ESH Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and ESH Acquisition
The main advantage of trading using opposite Bassett Furniture and ESH Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, ESH Acquisition 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 ESH Acquisition will offset losses from the drop in ESH Acquisition'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 |
| ESH Acquisition vs. Entegris | ESH Acquisition vs. Boston Properties | ESH Acquisition vs. Vishay Intertechnology | ESH Acquisition vs. Taylor Morn Home |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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