Correlation Between Bassett Furniture and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Vera Bradley 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 Vera Bradley 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 Vera Bradley, you can compare the effects of market volatilities on Bassett Furniture and Vera Bradley 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 Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Vera Bradley.
Diversification Opportunities for Bassett Furniture and Vera Bradley
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bassett and Vera is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley 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 Vera Bradley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vera Bradley has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Vera Bradley go up and down completely randomly.
Pair Corralation between Bassett Furniture and Vera Bradley
Given the investment horizon of 90 days Bassett Furniture Industries is expected to generate 0.63 times more return on investment than Vera Bradley. However, Bassett Furniture Industries is 1.6 times less risky than Vera Bradley. It trades about 0.05 of its potential returns per unit of risk. Vera Bradley is currently generating about -0.03 per unit of risk. If you would invest 1,381 in Bassett Furniture Industries on September 3, 2024 and sell it today you would earn a total of 142.00 from holding Bassett Furniture Industries or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Vera Bradley
Performance |
| Timeline |
| Bassett Furniture |
| Vera Bradley |
Bassett Furniture and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Vera Bradley
The main advantage of trading using opposite Bassett Furniture and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Vera Bradley 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 Vera Bradley will offset losses from the drop in Vera Bradley'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 |
| Vera Bradley vs. Rocky Brands | Vera Bradley vs. Steven Madden | Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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