Correlation Between Bassett Furniture and Lifetime Brands
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Lifetime Brands 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 Lifetime Brands 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 Lifetime Brands, you can compare the effects of market volatilities on Bassett Furniture and Lifetime Brands 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 Lifetime Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Lifetime Brands.
Diversification Opportunities for Bassett Furniture and Lifetime Brands
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bassett and Lifetime is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Lifetime Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifetime Brands 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 Lifetime Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifetime Brands has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Lifetime Brands go up and down completely randomly.
Pair Corralation between Bassett Furniture and Lifetime Brands
Given the investment horizon of 90 days Bassett Furniture is expected to generate 2.05 times less return on investment than Lifetime Brands. But when comparing it to its historical volatility, Bassett Furniture Industries is 1.3 times less risky than Lifetime Brands. It trades about 0.14 of its potential returns per unit of risk. Lifetime Brands is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 565.00 in Lifetime Brands on November 2, 2024 and sell it today you would earn a total of 53.00 from holding Lifetime Brands or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Lifetime Brands
Performance |
| Timeline |
| Bassett Furniture |
| Lifetime Brands |
Bassett Furniture and Lifetime Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Lifetime Brands
The main advantage of trading using opposite Bassett Furniture and Lifetime Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Lifetime Brands 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 Lifetime Brands will offset losses from the drop in Lifetime Brands' 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 |
| Lifetime Brands vs. Bassett Furniture Industries | Lifetime Brands vs. Flexsteel Industries | Lifetime Brands vs. Hamilton Beach Brands | Lifetime Brands vs. Natuzzi SpA |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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