Correlation Between Bassett Furniture and Nova Lifestyle
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Nova Lifestyle 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 Nova Lifestyle 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 Nova Lifestyle I, you can compare the effects of market volatilities on Bassett Furniture and Nova Lifestyle 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 Nova Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Nova Lifestyle.
Diversification Opportunities for Bassett Furniture and Nova Lifestyle
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bassett and Nova is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Nova Lifestyle I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Lifestyle I 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 Nova Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Lifestyle I has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Nova Lifestyle go up and down completely randomly.
Pair Corralation between Bassett Furniture and Nova Lifestyle
Given the investment horizon of 90 days Bassett Furniture Industries is expected to generate 0.35 times more return on investment than Nova Lifestyle. However, Bassett Furniture Industries is 2.87 times less risky than Nova Lifestyle. It trades about 0.07 of its potential returns per unit of risk. Nova Lifestyle I is currently generating about -0.29 per unit of risk. If you would invest 1,397 in Bassett Furniture Industries on August 30, 2024 and sell it today you would earn a total of 111.00 from holding Bassett Furniture Industries or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Nova Lifestyle I
Performance |
| Timeline |
| Bassett Furniture |
| Nova Lifestyle I |
Bassett Furniture and Nova Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Nova Lifestyle
The main advantage of trading using opposite Bassett Furniture and Nova Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Nova Lifestyle 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 Nova Lifestyle will offset losses from the drop in Nova Lifestyle'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 |
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.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |