Correlation Between Bassett Furniture and RadNet
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and RadNet 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 RadNet 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 RadNet Inc, you can compare the effects of market volatilities on Bassett Furniture and RadNet 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 RadNet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and RadNet.
Diversification Opportunities for Bassett Furniture and RadNet
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bassett and RadNet is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and RadNet go up and down completely randomly.
Pair Corralation between Bassett Furniture and RadNet
Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the RadNet. In addition to that, Bassett Furniture is 1.29 times more volatile than RadNet Inc. It trades about -0.14 of its total potential returns per unit of risk. RadNet Inc is currently generating about -0.17 per unit of volatility. If you would invest 8,359 in RadNet Inc on September 13, 2024 and sell it today you would lose (513.00) from holding RadNet Inc or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. RadNet Inc
Performance |
| Timeline |
| Bassett Furniture |
| RadNet Inc |
Bassett Furniture and RadNet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and RadNet
The main advantage of trading using opposite Bassett Furniture and RadNet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, RadNet 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 RadNet will offset losses from the drop in RadNet'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 |
| RadNet vs. Sotera Health Co | RadNet vs. Neogen | RadNet vs. Myriad Genetics | RadNet vs. bioAffinity Technologies Warrant |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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