Correlation Between Bassett Furniture and POWR Lithium
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and POWR Lithium 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 POWR Lithium 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 POWR Lithium Corp, you can compare the effects of market volatilities on Bassett Furniture and POWR Lithium 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 POWR Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and POWR Lithium.
Diversification Opportunities for Bassett Furniture and POWR Lithium
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bassett and POWR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and POWR Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWR Lithium Corp 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 POWR Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWR Lithium Corp has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and POWR Lithium go up and down completely randomly.
Pair Corralation between Bassett Furniture and POWR Lithium
Given the investment horizon of 90 days Bassett Furniture is expected to generate 7.23 times less return on investment than POWR Lithium. But when comparing it to its historical volatility, Bassett Furniture Industries is 11.87 times less risky than POWR Lithium. It trades about 0.16 of its potential returns per unit of risk. POWR Lithium Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4.08 in POWR Lithium Corp on November 5, 2024 and sell it today you would lose (0.19) from holding POWR Lithium Corp or give up 4.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. POWR Lithium Corp
Performance |
| Timeline |
| Bassett Furniture |
| POWR Lithium Corp |
Bassett Furniture and POWR Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and POWR Lithium
The main advantage of trading using opposite Bassett Furniture and POWR Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, POWR Lithium 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 POWR Lithium will offset losses from the drop in POWR Lithium'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 |
| POWR Lithium vs. Teleflex Incorporated | POWR Lithium vs. Treasury Wine Estates | POWR Lithium vs. Spyre Therapeutics | POWR Lithium vs. RadNet Inc |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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