Correlation Between Bassett Furniture and Tandy Leather
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Tandy Leather 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 Tandy Leather 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 Tandy Leather Factory, you can compare the effects of market volatilities on Bassett Furniture and Tandy Leather 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 Tandy Leather. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Tandy Leather.
Diversification Opportunities for Bassett Furniture and Tandy Leather
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bassett and Tandy is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory 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 Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Tandy Leather go up and down completely randomly.
Pair Corralation between Bassett Furniture and Tandy Leather
Given the investment horizon of 90 days Bassett Furniture Industries is expected to generate 0.94 times more return on investment than Tandy Leather. However, Bassett Furniture Industries is 1.07 times less risky than Tandy Leather. It trades about 0.01 of its potential returns per unit of risk. Tandy Leather Factory is currently generating about 0.0 per unit of risk. If you would invest 1,593 in Bassett Furniture Industries on September 5, 2024 and sell it today you would lose (63.00) from holding Bassett Furniture Industries or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Tandy Leather Factory
Performance |
| Timeline |
| Bassett Furniture |
| Tandy Leather Factory |
Bassett Furniture and Tandy Leather Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Tandy Leather
The main advantage of trading using opposite Bassett Furniture and Tandy Leather positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Tandy Leather 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 Tandy Leather will offset losses from the drop in Tandy Leather's long position.| Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Crown Crafts | Bassett Furniture vs. MasterBrand | Bassett Furniture vs. MillerKnoll |
| Tandy Leather vs. Appian Corp | Tandy Leather vs. Okta Inc | Tandy Leather vs. MongoDB | Tandy Leather vs. Twilio 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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