Correlation Between Bassett Furniture and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Westinghouse Air 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 Westinghouse Air 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 Westinghouse Air Brake, you can compare the effects of market volatilities on Bassett Furniture and Westinghouse Air 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 Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Westinghouse Air.
Diversification Opportunities for Bassett Furniture and Westinghouse Air
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bassett and Westinghouse is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Westinghouse Air go up and down completely randomly.
Pair Corralation between Bassett Furniture and Westinghouse Air
Given the investment horizon of 90 days Bassett Furniture is expected to generate 1.44 times less return on investment than Westinghouse Air. In addition to that, Bassett Furniture is 1.69 times more volatile than Westinghouse Air Brake. It trades about 0.11 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.27 per unit of volatility. If you would invest 16,536 in Westinghouse Air Brake on August 28, 2024 and sell it today you would earn a total of 3,392 from holding Westinghouse Air Brake or generate 20.51% 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. Westinghouse Air Brake
Performance |
| Timeline |
| Bassett Furniture |
| Westinghouse Air Brake |
Bassett Furniture and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Westinghouse Air
The main advantage of trading using opposite Bassett Furniture and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air'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 |
| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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