Correlation Between Bassett Furniture and Kimball International
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Kimball International 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 Kimball International 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 Kimball International, you can compare the effects of market volatilities on Bassett Furniture and Kimball International 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 Kimball International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Kimball International.
Diversification Opportunities for Bassett Furniture and Kimball International
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bassett and Kimball is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Kimball International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball International 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 Kimball International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimball International has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Kimball International go up and down completely randomly.
Pair Corralation between Bassett Furniture and Kimball International
If you would invest 1,402 in Bassett Furniture Industries on August 24, 2024 and sell it today you would earn a total of 57.00 from holding Bassett Furniture Industries or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Kimball International
Performance |
| Timeline |
| Bassett Furniture |
| Kimball International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bassett Furniture and Kimball International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Kimball International
The main advantage of trading using opposite Bassett Furniture and Kimball International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Kimball International 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 Kimball International will offset losses from the drop in Kimball International's long position.The idea behind Bassett Furniture Industries and Kimball International 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.| Kimball International vs. Kimball Electronics | Kimball International vs. Interface | Kimball International vs. James River Group | Kimball International vs. Midland States Bancorp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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