Correlation Between Bassett Furniture and MasterBrand
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and MasterBrand 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 MasterBrand 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 MasterBrand, you can compare the effects of market volatilities on Bassett Furniture and MasterBrand 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 MasterBrand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and MasterBrand.
Diversification Opportunities for Bassett Furniture and MasterBrand
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bassett and MasterBrand is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and MasterBrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasterBrand 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 MasterBrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MasterBrand has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and MasterBrand go up and down completely randomly.
Pair Corralation between Bassett Furniture and MasterBrand
Given the investment horizon of 90 days Bassett Furniture Industries is expected to generate 0.79 times more return on investment than MasterBrand. However, Bassett Furniture Industries is 1.27 times less risky than MasterBrand. It trades about 0.32 of its potential returns per unit of risk. MasterBrand is currently generating about -0.06 per unit of risk. If you would invest 1,362 in Bassett Furniture Industries on August 28, 2024 and sell it today you would earn a total of 165.00 from holding Bassett Furniture Industries or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. MasterBrand
Performance |
| Timeline |
| Bassett Furniture |
| MasterBrand |
Bassett Furniture and MasterBrand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and MasterBrand
The main advantage of trading using opposite Bassett Furniture and MasterBrand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, MasterBrand 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 MasterBrand will offset losses from the drop in MasterBrand'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 |
| MasterBrand vs. Bassett Furniture Industries | MasterBrand vs. Ethan Allen Interiors | MasterBrand vs. Natuzzi SpA | MasterBrand vs. Flexsteel Industries |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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