Correlation Between Bassett Furniture and Solaris Energy
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Solaris Energy 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 Solaris Energy 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 Solaris Energy Infrastructure,, you can compare the effects of market volatilities on Bassett Furniture and Solaris Energy 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 Solaris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Solaris Energy.
Diversification Opportunities for Bassett Furniture and Solaris Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bassett and Solaris is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Solaris Energy Infrastructure, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Energy Infra 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 Solaris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Energy Infra has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Solaris Energy go up and down completely randomly.
Pair Corralation between Bassett Furniture and Solaris Energy
Given the investment horizon of 90 days Bassett Furniture is expected to generate 8.98 times less return on investment than Solaris Energy. But when comparing it to its historical volatility, Bassett Furniture Industries is 2.54 times less risky than Solaris Energy. It trades about 0.2 of its potential returns per unit of risk. Solaris Energy Infrastructure, is currently generating about 0.71 of returns per unit of risk over similar time horizon. If you would invest 1,314 in Solaris Energy Infrastructure, on September 1, 2024 and sell it today you would earn a total of 1,151 from holding Solaris Energy Infrastructure, or generate 87.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Solaris Energy Infrastructure,
Performance |
| Timeline |
| Bassett Furniture |
| Solaris Energy Infra |
Bassett Furniture and Solaris Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Solaris Energy
The main advantage of trading using opposite Bassett Furniture and Solaris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Solaris Energy 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 Solaris Energy will offset losses from the drop in Solaris Energy'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 |
| Solaris Energy vs. Bassett Furniture Industries | Solaris Energy vs. Vita Coco | Solaris Energy vs. Stepstone Group | Solaris Energy vs. SL Green Realty |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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