Correlation Between Bassett Furniture and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and National CineMedia 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 National CineMedia 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 National CineMedia, you can compare the effects of market volatilities on Bassett Furniture and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and National CineMedia.
Diversification Opportunities for Bassett Furniture and National CineMedia
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bassett and National is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and National CineMedia go up and down completely randomly.
Pair Corralation between Bassett Furniture and National CineMedia
Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the National CineMedia. In addition to that, Bassett Furniture is 1.26 times more volatile than National CineMedia. It trades about -0.14 of its total potential returns per unit of risk. National CineMedia is currently generating about 0.29 per unit of volatility. If you would invest 666.00 in National CineMedia on September 14, 2024 and sell it today you would earn a total of 71.00 from holding National CineMedia or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. National CineMedia
Performance |
| Timeline |
| Bassett Furniture |
| National CineMedia |
Bassett Furniture and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and National CineMedia
The main advantage of trading using opposite Bassett Furniture and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia'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 |
| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion International |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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